Question 1

With real-world examples,explain the various factors that can cause a shift in the supply curve of a commodity.

Accepted Answer

The answer of With real-world examples,explain the various factors that...

Question 2

Explain how the following will affect the supply curve of coffee.
a)A fall in the wages paid to coffee workers
b)An increase in the availability of high-yielding coffee plants
c)A decrease in the quantity of land under coffee cultivation

Accepted Answer

The answer of Explain how the following will affect the...

Question 3

Which of the following is likely to lead to an increase in the quantity supplied of steel?

Accepted Answer

A rise in the market price of steel typically leads to an increase in the quantity supplied, as producers are willing to supply more at higher prices.

Question 4

At a price of $1 per table,the quantity supplied of tables is 100 units,whereas the quantity demanded is 70 units.Given this information,which of the following statements is true?

Accepted Answer

At a price of $1 per table, the quantity supplied (100 units) exceeds the quantity demanded (70 units), resulting in a surplus of tables in the market.

Question 5

Which of the following is likely to cause the supply curve for steel window frames to shift to the right?

Accepted Answer

A decrease in the cost of production of steel due to a new subsidy would make it cheaper for firms to produce steel window frames, leading to an increase in supply and a rightward shift in the supply curve.

Question 6

Consider a market where the demand curve is downward sloping and the supply curve is upward sloping (so they are neither vertical nor horizontal).If the consumers' willingness to pay for the hundredth unit and the seller's willingness to accept for the 175th unit are both $5.00,then ________.

Accepted Answer

At the price of $5.00, the quantity supplied is 175 units, while the quantity demanded is only 100 units. This means that there is an excess supply of 75 units.

Question 7

Assume that a worker in a technology firm can produce 3 circuit boards in an hour.Due to subsequent innovation,she is now able to produce 6 circuit boards per hour.Other things remaining the same,the firm's supply curve is likely to ________.

Accepted Answer

With the increase in productivity, the firm's ability to supply circuit boards has increased, which will lead to a rightward shift in the supply curve.

Question 8

Consider a market where the demand curve is downward sloping and the supply curve is upward sloping (so they are neither vertical nor horizontal).If the consumers' willingness to pay for the hundredth unit is $9.00 and the seller's willingness to accept for the hundredth unit $9.00,then the ________.

Accepted Answer

If the consumers' willingness to pay for the hundredth unit is equal to the seller's willingness to accept for the hundredth unit, it means that they both agree on the price of $9.00 for that unit. However, since the demand and supply curves are not vertical or horizontal, it implies that the equilibrium quantity will not be exactly 100 units. Therefore, neither A nor B is necessarily true. As for C, it is not relevant to the given information. The only logical conclusion is that the willingness to pay exceeds the willingness to accept for the ninety-ninth unit, which results in a price of $9.00 and further transactions will not take place beyond this point.

Question 9

The equilibrium quantity in a perfectly competitive market is determined at the point of ________.

Accepted Answer

In a perfectly competitive market, the equilibrium quantity is determined at the point where the demand and supply curves intersect each other. At this point, the quantity demanded by consumers is equal to the quantity supplied by producers. This means that there is no excess demand or supply in the market, and the price and quantity are in balance. The point of intersection is also known as the market-clearing price or the equilibrium price. Therefore, choice A, which states that the equilibrium quantity is determined at the point of intersection of the demand and supply curves, is the correct choice.

Question 10

In a perfectly competitive market,the market clearing price is ________ the equilibrium price.

Accepted Answer

In a perfectly competitive market, the market clearing price is the price at which the quantity demanded equals the quantity supplied, which is the definition of the equilibrium price. Therefore, the market clearing price and the equilibrium price are always equal in a perfectly competitive market.

Question 11

A surplus occurs in a market when ________.

Accepted Answer

A surplus occurs in a market when the price is higher than the equilibrium price, leading to a situation where the quantity supplied exceeds the quantity demanded.

Question 12

An expected increase in the market price of oil in the coming year is likely to ________ in the current year.

Accepted Answer

An expected increase in the market price of oil in the coming year would likely lead producers to reduce current supply in anticipation of higher future prices, shifting the current supply curve to the left.

Question 13

Assume that a seller in a perfectly competitive market charges more than the equilibrium price.It is likely that this seller will ________.

Accepted Answer

In a perfectly competitive market, all sellers charge the same price which is determined by the equilibrium of supply and demand. If a seller charges more than the equilibrium price, their product will be more expensive than that of their competitors, making it unattractive for buyers. Consequently, the seller is likely to lose almost all of their buyers, resulting in a significant decrease in sales and revenue. Therefore, option D is the correct answer.

Question 14

Which of the following statements correctly describes perfectly competitive market equilibrium?

Accepted Answer

In perfect competition, the market price will settle at the point where the supply and demand curves intersect, which is the point where the quantity supplied equals the quantity demanded. This is the market equilibrium point, and it is achieved without any government intervention. In a perfectly competitive market, there is no excess supply or demand, so option C is incorrect. Multiple equilibria are possible in some markets, but not in a perfectly competitive market, so option D is also incorrect.

Question 15

Consider a market where the demand curve is downward sloping and the supply curve is upward sloping (so they are neither vertical nor horizontal).If the consumers' willingness to pay for the hundredth unit is $7.00 and the seller's willingness to accept for the hundredth unit is $10.00,then the equilibrium ________.

Accepted Answer

Since the consumers' willingness to pay for the hundredth unit is $7.00 and the seller's willingness to accept for the hundredth unit is $10.00, it implies that the equilibrium price and quantity will be somewhere between $7.00 and $10.00 and less than 100 units. This is because the demand curve is downward sloping, and the price must be lower to induce consumers to buy more than 100 units. Therefore, the best choice is A.

Question 16

A fall in the price of flour,used in making cakes,is likely to ________ of cakes.

Accepted Answer

A fall in the price of flour reduces production costs, leading to an increase in the supply of cakes as producers are willing to supply more at each price level.

Question 17

At the competitive equilibrium,the ________.

Accepted Answer

At the competitive equilibrium, the quantity demanded is equal to the quantity supplied of a good. This is the point at which there is no shortage or surplus of the good in the market and the market clears.

Question 18

The development of genetically modified soybean seeds such as Roundup Ready seeds lowered tillage costs for soybean growers.How will this technological advance affect the supply of soybeans?

Accepted Answer

The development of Roundup Ready seeds, which allow farmers to control weeds more easily and reduce the need for tillage, will lower the costs of production and increase productivity. As a result, soybean growers will be able to supply more soybeans at a lower cost, leading to an increase in supply. This will result in a movement along the supply curve to the right.

Question 19

How are the following events likely to affect the market supply of rice in an economy?
a)A fall in the wage rate of farm labor
b)An increase in the productivity of farm capital due to better technology
c)An increase in the use of agricultural land for non-agricultural purposes

Accepted Answer

The answer of How are the following events likely to...

Question 20

Which of the following is likely to lead to a rightward shift in the supply curve of cotton?

Accepted Answer

An increase in labor productivity due to training programs would likely lead to a rightward shift in the supply curve of cotton because it would result in increased efficiency in producing cotton, which would lower the cost of production and increase the quantity of cotton supplied at any given price.

Quiz 4: Demand, Supply, and Equilibrium