Question 1

Figure 3-8
 
-Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D₁ and S₂ (point B) Which of the following changes would cause the equilibrium to change to point C?
A) a positive change in the technology used to produce apples and decrease in the price of oranges, a substitute for apples
B) an increase in the wages of apple workers and an increase in the price of oranges, a substitute for apples
C) an increase in the number of apple producers and a decrease in the number of apple trees as a result of disease
D) a decrease in the wages of apple workers and an increase in the price of oranges, a substitute for apples

Accepted Answer

The answer of Figure 3-8
 
-Refer to Figure 3-8.The graph...

Question 2

Figure 3-8
 
- Refer to Figure 3-8. The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D₂ and S₂ (point E). Which of the following changes would cause the equilibrium to change to point A?
A) a positive change in the technology used to produce apples and decrease in the price of oranges, a substitute for apples
B) an increase in the wages of apple workers and a decrease in the price of oranges, a substitute for apples
C) an increase in the number of apple producers and a decrease in the number of apple trees as a result of disease
D) a decrease in the wages of apple workers and an increase in the price of oranges, a substitute for apples

Accepted Answer

A decrease in the wages of apple workers would decrease the cost of producing apples and shift the supply curve to the right (from S2 to S1), while an increase in the price of oranges, a substitute for apples, would increase the demand for apples and shift the demand curve to the right (from D2 to D1). The intersection of D1 and S1 would result in a new equilibrium point A with a lower price and a higher quantity of apples traded. Option A is incorrect because a positive change in the technology used to produce apples would increase supply and shift the supply curve to the right, while a decrease in the price of oranges would decrease the demand for apples and shift the demand curve to the left, resulting in a new equilibrium point to the right of point E. Option B is incorrect because an increase in the wages of apple workers would increase the cost of producing apples and shift the supply curve to the left, while a decrease in the price of oranges would decrease the demand for apples and shift the demand curve to the left, resulting in a new equilibrium point to the left of point E. Option C is incorrect because an increase in the number of apple producers would increase the supply of apples and shift the supply curve to the right, while a decrease in the number of apple trees as a result of disease would decrease the supply of apples and shift the supply curve to the left, resulting in a new equilibrium point to the right or left of point E, depending on the relative magnitudes of the shifts in demand and supply curves.

Question 3

Assume that the demand curve for MP3 players shifts to the right and the supply curve for MP3 players shift to the left,but the supply curve shifts more than the demand curve.As a result
A) both the equilibrium price and quantity of MP3 players will decrease.
B) the equilibrium price of MP3 players will decrease; the equilibrium quantity will increase.
C) the equilibrium price of MP3 players may increase or decrease; the equilibrium quantity will decrease.
D) the equilibrium price of MP3 players will increase; the equilibrium quantity will decrease.

Accepted Answer

If the supply curve shifts more than the demand curve, then the equilibrium price will increase, and the equilibrium quantity will decrease. This is because the decrease in supply will cause a shortage, and the price will increase to ration the limited quantity available. The increase in price will also decrease the quantity demanded, leading to a decrease in the equilibrium quantity.

Question 4

Figure 3-8
 
-Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D₁ and S₁ (point A) If there is a shortage of apples, how will the equilibrium point change?
A) The equilibrium point will move from A to B.
B) The equilibrium point will move from A to C.
C) There will be no change in the equilibrium point.
D) The equilibrium point will move from A to E.

Accepted Answer

The answer of Figure 3-8
 
-Refer to Figure 3-8.The graph...

Question 5

Assume that the demand curve for MP3 players shifts to the right and the supply curve for MP3 players shift to the left,but the supply curve shifts less than the demand curve.As a result
A) both the equilibrium price and quantity of MP3 players will decrease.
B) both the equilibrium price and quantity of MP3 players will increase.
C) the equilibrium price of MP3 players may increase or decrease; the equilibrium quantity will decrease.
D) the equilibrium price of MP3 players will increase; the equilibrium quantity will decrease.

Accepted Answer

The answer of Assume that the demand curve for MP3...

Question 6

Figure 3-8
 
-Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D₁ and S₂ (point B) Assume that Motorcycles are a normal good. If there is an increase in number of companies producing motorcycles and a decrease in income (assume motorcycles are a normal good), the equilibrium could move to which point?
A) A
B) B
C) C
D) E

Accepted Answer

An increase in the number of companies producing motorcycles would shift the supply curve to the right (from S2 to S3). A decrease in income would shift the demand curve to the left (from D1 to D2). The new equilibrium point would be where the new supply curve (S3) intersects the new demand curve (D2) which is at point C. At point A, there is a surplus of motorcycles which would lead to a decrease in price and an increase in quantity demanded to reach equilibrium. At point B and E, there is still a competitive equilibrium but the quantity demanded and supplied are lower than at point C.

Question 7

Figure 3-8
 
-Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for sugar at the intersection of D₁ and S₁ (point A) If there is an increase in the price of fertilizer used on sugar cane and there is a decrease in tastes for sugar-sweetened soft drinks, how will the equilibrium point change?
A) The equilibrium point will move from A to B.
B) The equilibrium point will move from A to C.
C) There will be no change in the equilibrium point.
D) The equilibrium point will move from A to E.

Accepted Answer

The answer of Figure 3-8
 
-Refer to Figure 3-8.The graph...

Question 8

Figure 3-8
 
-Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D₁ and S₁ (point A) If the price of motorcycle engines increases, and the wages of motorcycle workers increase, how will the equilibrium point change?
A) The equilibrium point will move from A to E.
B) The equilibrium point will move from A to B.
C) The equilibrium point will move from A to C.
D) The equilibrium will first move from A to B, then return to A.

Accepted Answer

The answer of Figure 3-8
 
-Refer to Figure 3-8.The graph...

Question 9

Figure 3-8
 
-Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D₁ and S₁ (point A) If there is an increase in the wages of apple workers and an increase in the price of oranges, a substitute for apples, the equilibrium could move to which point?
A) none of the points shown
B) B
C) C
D) E

Accepted Answer

The answer of Figure 3-8
 
-Refer to Figure 3-8.The graph...

Question 10

Assume that both the demand curve and the supply curve for MP3 players shift to the right but the supply curve shifts more than the demand curve.As a result
A) both the equilibrium price and quantity of MP3 players will decrease.
B) the equilibrium price of MP3 players will decrease; the equilibrium quantity will increase.
C) the equilibrium price of MP3 players may increase or decrease; the equilibrium quantity will decrease.
D) the equilibrium price of MP3 players will increase; the equilibrium quantity will decrease.

Accepted Answer

When both the demand and supply curves shift to the right, the quantity demanded and quantity supplied will both increase. However, if the supply curve shifts more than the demand curve, this will result in a larger increase in the quantity supplied compared to the increase in quantity demanded. This means that the equilibrium price will decrease, while the equilibrium quantity will increase. Therefore, option B is the correct answer.

Question 11

"The price of compact fluorescent light bulbs fell because of improvements in production technology.As a result,the demand for incandescent light bulbs decreased.This caused the price of incandescent light bulbs to fall; as the price of incandescent light bulbs fell the demand for incandescent light bulbs decreased even further." Evaluate this statement.
A) The statement is false. A decrease in the price of compact fluorescent light bulbs would decrease the demand for incandescent light bulbs, but a decrease in the price of incandescent light bulbs would not cause the demand for incandescent light bulbs to decrease.
B) The statement is false because the demand for incandescent light bulbs would increase as the price of compact fluorescent light bulbs fell.
C) The statement is false because compact fluorescent light bulbs producers would not reduce their prices as a result of improvements in technology; doing so would reduce their profits.
D) The statement is false because it confuses the law of demand with the law of supply.

Accepted Answer

The answer of "The price of compact fluorescent light bulbs...

Question 12

Figure 3-8
 
-Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D₁ and S₁ (point A) If there is an increase in the wages of motorcycle workers and an increase in the price of motorcycle insurance, a complement to motorcycles, the equilibrium could move to which point?
A) A
B) B
C) C
D) E

Accepted Answer

The answer of Figure 3-8
 
-Refer to Figure 3-8.The graph...

Question 13

Figure 3-8
 
-Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D₂ and S₁ (point C). Which of the following changes would cause the equilibrium to change to point B?
A) a positive change in the technology used to produce apples and decrease in the price of oranges, a substitute for apples
B) an increase in the wages of apple workers and an increase in the price of oranges, a substitute for apples
C) an increase in the number of apple producers and a decrease in the number of apple trees as a result of disease
D) a decrease in the wages of apple workers and an increase in the price of oranges, a substitute for apples

Accepted Answer

The answer of Figure 3-8
 
-Refer to Figure 3-8.The graph...

Question 14

Figure 3-8
 
-Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D₂ and S₂ (point E) If the technology to produce motorcycles improves and the number of buyers increases, how will the equilibrium point change?
A) The equilibrium point will move from E to A.
B) The equilibrium point will move from E to B.
C) The equilibrium point will move from E to C.
D) The equilibrium point will remain at E.

Accepted Answer

The improvement in technology will shift the supply curve to the right, and the increase in the number of buyers will shift the demand curve to the right. The new equilibrium point will be at the intersection of the new supply and demand curves, which is point A.

Question 15

Which of the following statements is true?
A) An increase in demand causes a change in equilibrium price; the change in price does not cause a further change in demand or supply.
B) A decrease in supply causes equilibrium price to rise; the increase in price then results in a decrease in demand.
C) If both demand and supply increase there must be an increase in equilibrium price; equilibrium quantity may either increase or decrease.
D) If demand decreases and supply increases one cannot determine if equilibrium price will increase or decrease without knowing which change is greater.

Accepted Answer

The answer of Which of the following statements is true?
A)...

Question 16

Figure 3-8
 
-Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D₁ and S₁ (point A) If the price of oranges, a substitute for apples, decreases and the wages of apple workers increase, how will the equilibrium point change?
A) The equilibrium point will move from A to E.
B) The equilibrium point will move from A to B.
C) The equilibrium point will move from A to C.
D) The equilibrium will first move from A to B, then return to A.

Accepted Answer

The answer of Figure 3-8
 
-Refer to Figure 3-8.The graph...

Question 17

Figure 3-8
 
-Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D₁ and S₁ (point A) If there is a surplus of motorcycles how will the equilibrium point change?
A) The equilibrium point will move from A to B.
B) The equilibrium point will move from A to C.
C) There will be no change in the equilibrium point.
D) The equilibrium point will move from A to E.

Accepted Answer

The answer of Figure 3-8
 
-Refer to Figure 3-8.The graph...

Question 18

Figure 3-8
 
-Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D₂ and S₁ (point C) Which of the following changes would cause the equilibrium to change to point B?
A) a positive change in the technology used to produce motorcycles and decrease in the price of motorcycle insurance, a complement to motorcycles
B) an increase in the wages of motorcycle workers and a decrease in the price of motorcycle insurance, a complement to motorcycles
C) an increase in the number of motorcycle producers and an increase in the number of consumers who prefer riding motorcycles
D) an increase in the wages of motorcycle workers and an increase in the price of motorcycle insurance, a complement to motorcycles

Accepted Answer

An increase in wages raises production costs, shifting the supply curve left, while a decrease in the price of a complement (motorcycle insurance) increases demand, shifting the demand curve right. This combination moves the equilibrium to point B.

Question 19

Figure 3-8
 
-Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D₂ and S₁ (point C) If the price of motorcycle side cars (a complement to motorcycles) decreases, and the wages of motorcycle workers increase, how will the equilibrium point change?
A) The equilibrium point will move from C to E.
B) The equilibrium point will move from C to B.
C) The equilibrium point will move from C to A.
D) The equilibrium will first move from C to A, then return to C.

Accepted Answer

The answer of Figure 3-8
 
-Refer to Figure 3-8.The graph...

Question 20

Figure 3-8
 
- Refer to Figure 3-8. The graph in this figure illustrates an initial competitive equilibrium in the market for sugar at the intersection of D₁ and S₂ (point B). If there is an decrease in the price of fertilizer used on sugar cane and there is a decrease in tastes for sugar-sweetened soft drinks, how will the equilibrium point change?
A) The equilibrium point will move from B to A. 
B) The equilibrium point will move from B to C.
C) There will be no change in the equilibrium point. 
D) The equilibrium point will move from B to E.

Accepted Answer

A decrease in the price of fertilizer used on sugar cane will increase the supply of sugar, shifting the supply curve to the right from S₂ to S₃. A decrease in tastes for sugar-sweetened soft drinks will decrease the demand for sugar, shifting the demand curve to the left from D₁ to D₂. The new equilibrium point will be at the intersection of S₃ and D₂, which is point C. Therefore, the equilibrium point will move from B to C.

Quiz 3: Where Prices Come From: The Interaction of Demand and Supply

Figure 3-8 -Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D₁ and S₂ (point B) Which of the following changes would cause the equilibrium to change to point C?

Figure 3-8 - Refer to Figure 3-8. The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D₂ and S₂ (point E) . Which of the following changes would cause the equilibrium to change to point A?

Assume that the demand curve for MP3 players shifts to the right and the supply curve for MP3 players shift to the left,but the supply curve shifts more than the demand curve.As a result

Figure 3-8 -Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D₁ and S₁ (point A) If there is a shortage of apples, how will the equilibrium point change?

Assume that the demand curve for MP3 players shifts to the right and the supply curve for MP3 players shift to the left,but the supply curve shifts less than the demand curve.As a result

Assume that both the demand curve and the supply curve for MP3 players shift to the right but the supply curve shifts more than the demand curve.As a result

Figure 3-8 -Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D₂ and S₁ (point C) . Which of the following changes would cause the equilibrium to change to point B?

Which of the following statements is true?

Figure 3-8 -Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D₁ and S₁ (point A) If there is a surplus of motorcycles how will the equilibrium point change?

Figure 3-8 -Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D₂ and S₁ (point C) Which of the following changes would cause the equilibrium to change to point B?