Econ - 1.1 quiz

Which of the following is true about market equilibrium?

- There is neither a surplus nor a shortage, everything produced is sold - If the market is left free of intervention, market equilibrium will be reached automatically - The quantity demanded is exactly the same as the quantity supplied

The demand curve in the U.S. market for oranges shifts inward (to the left). What would this change most likely have been caused by?

A scientific study that reveals that orange consumption decreases life expectancy.

In order to compensate film studios, like Warner Bros., for the loss incurred because of piracy, the government decides to impose an extra tax on DVDs, the revenues of which will be directly distributed to the studios. As a result of the tax, the price of DVDs will increase. What happens to the demand curve of the market for DVD players?

Demand curve shifts inwards to the left

On an unusually cold day in summer, what happens to the demand curve of the market for ice cream?

Demand curve shifts inwards to the left

How will an ageing population most probably affect the demand curve in the market for hearing aids?

Demand curve shifts outwards to the right

What happened to the demand curve of strollers after the second world war, during the so-called baby boom, when the birth rate increased drastically?

Demand curve shifts outwards to the right

State the two effects that explain the Law of Demand and the slope of the demand curve of a good.

Income and substitution

Firms that use cotton as their key factor of production in producing t-shirts also have the ability to use their factors of production to produce sweatshirts instead. As the weather gets colder, demand for sweatshirts increases and thus their price increases relative to that of t-shirts. What is the most likely effect of this on the market for t-shirts?

Supply curve shifts horizontally to the left

During the economic crisis of 2008-9, several hotels went out of business. This was because spending on luxuries like vacations fell more than spending on necessities. Demand for vacations is more price elastic. What happens to the supply curve of the hotel industry?

Supply curve shifts inwards to the left

If the price of rubber increases, what happens to the supply curve of the car tire (tyre) market?

Supply curve shifts inwards to the left

One day, the government decides to impose regulation to increase all wages in the country by 10%. What happens to the supply curve of the market for laptops?

Supply curve shifts inwards to the left

What happens when a non-price determinant of demand changes?

There is a shift in the demand curve