ECON 150 - SUPPLY AND DEMAND - W03 QUIZ

Which of the following will cause the demand curve for product A to shift to the left?

an increase in money income if A is an inferior good

Refer to the diagram. A surplus of 160 units would be encountered if the price was

$1.60.

Assume in a competitive market that price is initially below the equilibrium level. We can predict that price will

increase, quantity demanded will decrease, and quantity supplied will increase.

Suppose that tacos and pizza are substitutes, and that soda and pizza are complements. We would expect an increase in the price of pizza to

reduce the demand for soda and increase the demand for tacos.

An effective price floor on wheat will

result in a surplus of wheat.

Other things equal, an excise tax on a product will

increase its price.

(Advanced analysis) The demand for commodity X is represented by the equation P = 100 - 2Q and supply by the equation P = 10 + 4Q. The equilibrium price is

$70.

Refer to the diagram, which shows demand and supply conditions in the competitive market for product X. If supply is S1 and demand D0, then

0F represents a price that would result in a shortage of AC.

Which of the following statements is correct?

An increase in the price of C will decrease the demand for complementary product D.

Which of the diagrams illustrates the effect of a governmental subsidy on the market for AIDS research?

C only

When an economist says that the demand for a product has increased, this means that

consumers are now willing to purchase more of this product at each possible price.

There will be a surplus of a product when

consumers want to buy less than producers offer for sale.

In the following question you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for, or supply (S) of, X; (2) the equilibrium price (P) of X; and (3) the equilibrium quantity (Q) of X. A reduction in the number of firms producing X will

decrease S, increase P, and decrease Q.

In the following question you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for, or supply (S) of, X; (2) the equilibrium price (P) of X; and (3) the equilibrium quantity (Q) of X. An increase in the prices of resources used to produce X will

decrease S, increase P, and decrease Q.

In the following question you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for, or supply (S) of, X; (2) the equilibrium price (P) of X; and (3) the equilibrium quantity (Q) of X. If X is a normal good, an increase in income will

increase D, increase P, and increase Q.

The upward slope of the supply curve reflects the

law of supply.

One reason that the quantity demanded of a good increases when its price falls is that the

lower price increases the real incomes of buyers, enabling them to buy more.

Refer to the diagram. An increase in quantity supplied is depicted by a

move from point y to point x.

Since their introduction, prices of Blu-ray players have fallen and the quantity purchased has increased. This statement

suggests that the supply of Blu-ray players has increased.

Increasing marginal cost of production explains

why the supply curve is upsloping.