Top Hat Assessment 4.1

The equilibrium price of a pumpkin in the market depicted in the graph is:

$3 because the quantity supplied of pumpkins is equal to the quantity demanded of pumpkins.

Which of the following would lead to an increase in the supply of coffee, ceteris paribus?

An increase in the number of firms selling coffee

Which of the following will cause a decrease in the demand for batteries?

An increase in the price of digital cameras, a complement for batteries

The primary difference between a change in supply and a change in the quantity supplied is:

a change in quantity supplied is caused by a change in the price of the good itself, and a change in supply is caused by a change in a non-price determinant of supply.

For a normal good, an increase in consumer income leads to:

an increase in demand and an increase in both equilibrium price and quantity.

The law of demand states that:

price and quantity demanded are inversely (negatively) related, ceteris paribus.

The law of supply indicates that:

price and quantity supplied are directly (positively) related

Based on the information in the graph, a price of $4 per pumpkin will lead to a:

surplus of 200 pumpkins.

If the demand for chewing gum increases, ceteris paribus:

the equilibrium price and quantity of chewing gum will both increase.

If cotton clothing becomes more popular at the same time that the supply of cotton decreases, then basic supply and demand analysis predicts that:

the equilibrium price of cotton clothing will increase but the change in the equilibrium quantity of cotton clothing cannot be determined from the information given.