Question 1

If the demand for a product increases and the supply of the same product increases, the equilibrium price will increase.

Accepted Answer

The answer of If the demand for a product increases...

Question 2

As the number of firms in a market increases, the supply curve will shift to the left and the equilibrium price will rise.

Accepted Answer

As the number of firms in a market increases, the supply curve will shift to the right, not left, as there are more suppliers offering goods or services. This increase in supply will lead to a decrease in equilibrium price, not a rise, as producers compete with each other to attract buyers.

Question 3

As the number of firms in a market decreases, the supply curve will shift to the left and the equilibrium price will fall.

Accepted Answer

As the number of firms in a market decreases, the supply curve will shift to the left, leading to a decrease in supply. This typically results in an increase in the equilibrium price, not a fall, because the reduced supply tends to push prices up due to the lower availability of the product.

Question 4

If the demand for a product decreases and the supply of the same product increases, the equilibrium quantity will increase.

Accepted Answer

When demand decreases and supply increases, the equilibrium quantity will actually decrease. This is because there will be an excess supply of the product, causing suppliers to lower their prices in order to sell their surplus inventory. As prices decrease, the quantity demanded will increase while the quantity supplied will decrease, eventually reaching a new equilibrium point at a lower quantity.

Question 5

Article Summary
A growing number of U.S. citizens are going to other countries for elective surgery procedures. Improved quality and significant cost savings abroad have attracted an increasing number of what are being referred to as American medical tourists, especially those who either do not have insurance or whose insurance does not cover the desired procedure. As few as five years ago, Americans tended to travel to countries such as Thailand or Mexico for the procedures, but many are now choosing to go to Europe, where governments and hospitals are now publicizing these services. Many of the procedures being done overseas are joint replacement, and partly in response to the number of patients going abroad for these procedures, programs are being developed to reduce the cost of these surgeries in the United States.
Source: Elizabeth Rosenthal, "The Growing Popularity of Having Surgery Overseas," New York Times, August 6, 2013.
-Refer to the Article Summary. If European governments and hospitals continue to publicize their existing services to American medical tourists and more Americans consider joint-replacement surgery to improve their quality of life, what will happen in the market for joint-replacement surgery as a result of these two factors?
A) Demand will increase, but these two factors will not shift the supply curve.
B) Supply will increase, but these two factors will not shift the demand curve.
C) Demand and supply will both increase.
D) Demand will increase and supply will decrease.

Accepted Answer

The answer of Article Summary
A growing number of U.S. citizens...

Question 6

As the number of firms in a market increases, the supply curve will shift to the right and the equilibrium quantity will rise.

Accepted Answer

This is because an increase in the number of firms will result in more goods and services being available in the market, leading to an increase in supply and a shift of the supply curve to the right. This, in turn, will lead to an increase in the equilibrium quantity.

Question 7

If the demand curve for a product shifts to the left and the supply curve for the product shifts to the left, the equilibrium quantity will decrease.

Accepted Answer

When both the demand and supply curves shift to the left, it means that both the quantity demanded and quantity supplied have decreased. This will cause a decrease in the equilibrium quantity.

Question 8

If the number of firms producing electric cars increases and consumer preference for electric cars increases, the equilibrium quantity of electric cars will definitely increase.

Accepted Answer

When the number of firms producing electric cars increases, the supply of electric cars in the market will increase, assuming that the cost of production remains constant. With an increase in consumer preference for electric cars, the demand for electric cars will increase. This increase in both supply and demand will lead to a new equilibrium quantity of electric cars, which will be higher than the previous equilibrium quantity. Therefore, the statement is true.

Question 9

If the population increases and input prices increase, the equilibrium price of a product will definitely increase.

Accepted Answer

The answer of If the population increases and input prices...

Question 10

If the demand for a product decreases and the supply of the product does not change, equilibrium price and equilibrium quantity will both increase.

Accepted Answer

If the demand for a product decreases, there will be an excess supply of the product in the market. This will lead to a decrease in the equilibrium price and a decrease in the equilibrium quantity.

Question 11

If the demand for a product increases and the supply of the product does not change, equilibrium price and equilibrium quantity will both increase.

Accepted Answer

When the demand for a product increases and the supply of the product remains constant, there is a shortage of the product at the original equilibrium price. This shortage of the product leads to an increase in the price until a new equilibrium is reached where the demand equals the supply again. As a result, both the equilibrium price and equilibrium quantity will increase.

Question 12

An increase in the demand for LED light bulbs due to changes in consumer tastes, accompanied by an increase in the supply of LED light bulbs as a result of government subsidies, will result in
A) an increase in the equilibrium quantity of LED light bulbs and no change in the equilibrium price.
B) an increase in the equilibrium price of LED light bulbs and no change in the equilibrium quantity.
C) an increase in the equilibrium price of LED light bulbs; the equilibrium quantity may increase or decrease.
D) an increase in the equilibrium quantity of LED light bulbs; the equilibrium price may increase or decrease.

Accepted Answer

An increase in both demand and supply of LED light bulbs would lead to an increase in the equilibrium quantity, as there are more buyers and sellers in the market. The equilibrium price, however, may increase, decrease, or stay the same depending on how much the demand and supply curves shift. If the increase in demand is greater than the increase in supply, then the equilibrium price will increase. If the increase in supply is greater than the increase in demand, then the equilibrium price will decrease. If the increases in demand and supply are equal, then the equilibrium price will stay the same.

Question 13

Suppose a positive technological change in the production of disease-resistant corn caused the price of corn to fall. Holding everything else constant, how would this affect the market for wheat (a substitute for corn)?
A) The supply of wheat would increase, and the equilibrium price of wheat would decrease.
B) The demand for wheat would decrease, and the equilibrium price of wheat would decrease.
C) The demand for wheat would increase because consumers could afford to buy more wheat and corn.
D) The demand for wheat would decrease, and the equilibrium price of wheat would increase.

Accepted Answer

When the price of corn falls due to a positive technological change, consumers are likely to buy more corn instead of its substitutes like wheat. This leads to a decrease in the demand for wheat, causing the equilibrium price of wheat to decrease as well.

Question 14

As the number of firms in a market decreases, the supply curve will shift to the left and the equilibrium price will rise.

Accepted Answer

When the number of firms in a market decreases, the overall supply in the market decreases. This shift in supply leads to a leftward shift in the supply curve, causing the equilibrium price to rise.

Question 15

Studies have shown that smoking cigarettes can cause heart disease. Assume this is true, and favorable weather has increased the tobacco harvest in North Carolina. In the market for cigarettes, these two developments would
A) decrease demand and decrease supply, resulting in an increase in the equilibrium quantity and a decrease in the equilibrium price of cigarettes.
B) increase demand and increase supply, resulting in an increase in the equilibrium quantity and an uncertain effect on the equilibrium price of cigarettes.
C) decrease demand and increase supply, resulting in a decrease in the equilibrium price and an uncertain effect on the equilibrium quantity of cigarettes.
D) decrease demand and increase supply, resulting in an increase in both the equilibrium price and the equilibrium quantity of cigarettes.

Accepted Answer

The increase in tobacco harvest will lead to an increase in the supply of cigarettes, which will decrease the equilibrium price. However, the fact that smoking cigarettes can cause heart disease will decrease the demand for cigarettes, which will also decrease the equilibrium quantity. Therefore, there will be a decrease in demand and an increase in supply, resulting in a decrease in the equilibrium price and an uncertain effect on the equilibrium quantity of cigarettes. Option C is the only choice that reflects this scenario.

Question 16

If the population increases and input prices decrease, the equilibrium quantity of a product will definitely increase.

Accepted Answer

When the population increases, it creates a larger demand for the product, which can lead to an increase in the equilibrium quantity. When input prices decrease, it lowers the cost of production, which can also increase the equilibrium quantity. Therefore, if both of these factors occur simultaneously, the equilibrium quantity will definitely increase.

Question 17

Suppose a drought resulted in a major reduction in the California lettuce crop. In the market for lettuce,
A) the supply curve shifted to the left, resulting in an increase in the equilibrium price.
B) the supply curve shifted to the left, resulting in a decrease in the equilibrium price.
C) the demand curve shifted to the right, resulting in an increase in the equilibrium price.
D) the demand curve shifted to the left, resulting in a decrease in the equilibrium price.

Accepted Answer

A drought resulting in a major reduction in the California lettuce crop would decrease the supply of lettuce, causing a leftward shift in the supply curve. This would result in an increase in the equilibrium price.

Question 18

If the number of firms producing mouthwash increases and consumer preference for mouthwash increases, the equilibrium price of mouthwash will definitely increase.

Accepted Answer

The answer of If the number of firms producing mouthwash...

Question 19

If the demand for a product decreases and the supply of the same product decreases, the equilibrium price will decrease.

Accepted Answer

If both demand and supply decrease, the equilibrium price will depend on the extent of the decrease in each. It is possible for the equilibrium price to increase or remain unchanged even if both decrease, depending on the relative magnitudes of the shifts.

Question 20

If the demand for a product increases and the supply of the same product decreases, the equilibrium price will increase.

Accepted Answer

When demand increases and supply decreases, there is a shortage of the product, which will lead to an increase in the equilibrium price.

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