Question 1

Suppose more firms enter the computer market.What will happen to demand,quantity demanded,supply,and quantity supplied as a result of this market change?

Accepted Answer

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Question 2

Suppose a war in the Middle East destroys many oil fields.This will cause a(n)
A)redistribution of income from the rich to the poor.
B)increase in the quantity of oil traded.
C)increase in oil prices.
D)decrease in the demand for oil.
E)increase in the supply of oil.

Accepted Answer

The destruction of oil fields in the Middle East will cause a decrease in the supply of oil, which will lead to an increase in oil prices. The increase in oil prices will impact the economy by increasing transportation and production costs, which can lead to inflation and slow economic growth.

Question 3

Why is the word equilibrium used to describe the price determined by supply and demand in a market?

Accepted Answer

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Question 4

Which of the following would be a likely cause for the increases in gasoline prices in the late-2000s?
A)Decreases in gasoline demand
B)Reductions in U.S.refinery capacity
C)Lower production costs for gasoline
D)A recession in the early 2000s
E)Increases in oil supply from the Middle East

Accepted Answer

Reductions in U.S. refinery capacity would limit the supply of gasoline, which would cause an increase in gasoline prices.

Question 5

Draw a supply and demand diagram with supply and demand both increasing and market equilibrium price increasing as well.

Accepted Answer

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Question 6

The high price of gasoline in the late-2000s was likely the result of
A)an increase in both the supply of and the demand for gasoline.
B)a decrease in both the supply of and the demand for gasoline.
C)an increase in the supply of gasoline along with a decrease in the demand for gasoline.
D)a decrease in the supply of gasoline along with an increase in the demand for gasoline.
E)no change in either the supply of or the demand for gasoline.

Accepted Answer

The high price of gasoline in the late-2000s was a result of a decrease in the supply of gasoline due to a decrease in crude oil production and refineries, and an increase in the demand for gasoline due to factors such as economic growth in developing countries and a shift towards larger, less fuel-efficient vehicles. This led to a situation where the amount of gasoline demanded exceeded the available supply, driving up the price.

Question 7

As a result of an increase in supply,ceteris paribus,the equilibrium price decreases and the equilibrium quantity increases.

Accepted Answer

This is the law of supply and demand. If there is an increase in supply, with all else remaining equal, there will be a surplus of goods or services, which will lead to a decrease in the equilibrium price as sellers compete to sell their goods. The increase in supply also means that more goods or services are available to consumers, which leads to an increase in the equilibrium quantity.

Question 8

When supply shifts right and demand shifts left at the same time,the equilibrium market price drops.

Accepted Answer

When supply increases (shifts right), it means more of the good is available, which tends to lower the price. When demand decreases (shifts left), it means there is less desire for the good, which also tends to lower the price. Together, these shifts lead to a decrease in the equilibrium market price.

Question 9

As a result of an increase in both supply and demand,the equilibrium price decreases while the equilibrium quantity increases.

Accepted Answer

When both supply and demand increase, the equilibrium quantity will increase, but the effect on equilibrium price is indeterminate without knowing the relative magnitudes of the shifts in supply and demand. If the increase in supply is larger than the increase in demand, the price could decrease, but if the increase in demand is larger, the price could increase.

Question 10

Shifts in the supply of and the demand for oil were the causes of the increased gasoline prices in the 2000s.

Accepted Answer

Increases in demand from emerging markets like China and India, as well as geopolitical events that disrupted supply (such as the Iraq War and tensions with Iran), led to shifts in both the supply of and the demand for oil, which in turn caused the increased gasoline prices during the 2000s.

Question 11

Suppose consumer incomes increase,and we are looking at a market for a normal good.What will happen to demand,quantity demanded,supply,and quantity supplied as a result of this market change?

Accepted Answer

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Question 12

An increase in supply and demand at the same time will always result in a higher equilibrium market price.

Accepted Answer

An increase in both supply and demand can lead to various outcomes for the equilibrium price depending on the magnitude of the shifts. If the increase in supply is larger than the increase in demand, the equilibrium price could actually decrease. If the increase in demand is larger, the price could increase. If they increase by the same amount, the price might stay the same but the quantity sold will increase.

Question 13

Suppose supply and demand are represented by the following equations: Q_D = 25 - 0.4P Q_S = 7 + 0.2P If supply changes so that Q_S = 13 + 0.2P calculate the change in equilibrium price that results.

Accepted Answer

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Question 14

Draw a supply and demand diagram.Label the equilibrium price and equilibrium quantity as well as the axes and curves.

Accepted Answer

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Question 15

A government energy policy that focuses on new technologies for conservation and new sources of energy would result in
A)an increase in both the supply of and the demand for gasoline.
B)a decrease in both the supply of and the demand for gasoline.
C)an increase in the supply of gasoline along with a decrease in the demand for gasoline.
D)a decrease in the supply of gasoline along with an increase in the demand for gasoline.
E)no change in either the supply of or the demand for gasoline.

Accepted Answer

Focusing on new technologies for conservation and new sources of energy would likely lead to an increase in the supply of gasoline (as new sources could include more efficient ways to produce gasoline or alternatives that reduce reliance on it) and a decrease in the demand for gasoline (as conservation efforts and alternative energy sources reduce the need for gasoline).

Question 16

It is impossible to use a supply and demand model to analyze the changes in gasoline prices during the mid-2000s.

Accepted Answer

A supply and demand model can be used to analyze the changes in gasoline prices during the mid-2000s. The increase in global demand, supply disruptions, and geopolitical factors all played a role in the changes in gasoline prices during that time period.

Question 17

Suppose demand and supply in a market can be expressed by these equations: Q_D = 40 - 0.5P Q_S = 15 + 2P If the prevailing market price is $30,what are the quantity demanded and the quantity supplied?

Accepted Answer

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Question 18

Suppose demand and supply in a market can be expressed by these equations: Q_D = 40 - 0.5P Q_S = 15 + 2P Calculate the equilibrium price and quantity.

Accepted Answer

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Question 19

Suppose demand and supply in a market can be expressed by these equations: Q_D = 40 - 0.5P Q_S = 15 + 2P If the prevailing market price is $14,what are the quantity demanded and the quantity supplied?

Accepted Answer

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Question 20

With a single supply and demand diagram,illustrate a shortage and a surplus.Carefully label the diagram.

Accepted Answer

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Quiz 3: The Supply and Demand Model

Suppose more firms enter the computer market.What will happen to demand,quantity demanded,supply,and quantity supplied as a result of this market change?

Suppose a war in the Middle East destroys many oil fields.This will cause a(n)

Why is the word equilibrium used to describe the price determined by supply and demand in a market?

Which of the following would be a likely cause for the increases in gasoline prices in the late-2000s?

Draw a supply and demand diagram with supply and demand both increasing and market equilibrium price increasing as well.

The high price of gasoline in the late-2000s was likely the result of

As a result of an increase in supply,ceteris paribus,the equilibrium price decreases and the equilibrium quantity increases.

When supply shifts right and demand shifts left at the same time,the equilibrium market price drops.

As a result of an increase in both supply and demand,the equilibrium price decreases while the equilibrium quantity increases.

Shifts in the supply of and the demand for oil were the causes of the increased gasoline prices in the 2000s.

Suppose consumer incomes increase,and we are looking at a market for a normal good.What will happen to demand,quantity demanded,supply,and quantity supplied as a result of this market change?

An increase in supply and demand at the same time will always result in a higher equilibrium market price.

Suppose supply and demand are represented by the following equations: QD = 25 - 0.4P QS = 7 + 0.2P If supply changes so that QS = 13 + 0.2P calculate the change in equilibrium price that results.

Draw a supply and demand diagram.Label the equilibrium price and equilibrium quantity as well as the axes and curves.

A government energy policy that focuses on new technologies for conservation and new sources of energy would result in

It is impossible to use a supply and demand model to analyze the changes in gasoline prices during the mid-2000s.

Suppose demand and supply in a market can be expressed by these equations: QD = 40 - 0.5P QS = 15 + 2P If the prevailing market price is $30,what are the quantity demanded and the quantity supplied?

Suppose demand and supply in a market can be expressed by these equations: QD = 40 - 0.5P QS = 15 + 2P Calculate the equilibrium price and quantity.

Suppose demand and supply in a market can be expressed by these equations: QD = 40 - 0.5P QS = 15 + 2P If the prevailing market price is $14,what are the quantity demanded and the quantity supplied?

With a single supply and demand diagram,illustrate a shortage and a surplus.Carefully label the diagram.

Suppose supply and demand are represented by the following equations: Q_D = 25 - 0.4P Q_S = 7 + 0.2P If supply changes so that Q_S = 13 + 0.2P calculate the change in equilibrium price that results.

Suppose demand and supply in a market can be expressed by these equations: Q_D = 40 - 0.5P Q_S = 15 + 2P If the prevailing market price is $30,what are the quantity demanded and the quantity supplied?

Suppose demand and supply in a market can be expressed by these equations: Q_D = 40 - 0.5P Q_S = 15 + 2P Calculate the equilibrium price and quantity.

Suppose demand and supply in a market can be expressed by these equations: Q_D = 40 - 0.5P Q_S = 15 + 2P If the prevailing market price is $14,what are the quantity demanded and the quantity supplied?