Question

Question 1 

Other things remain unchanged, the market demand curve for a particular expected to shift leftwards when the price of that product declines. . 

True False 

Question 2 

Other things remain equal, which of the following factors causes the market supply curve of Blue-ray players to shift leftwards? 

The costs of producing a single Blue-ray player increases. 

The number of firms selling Blue-ray players increases. 

The sellers are expecting the price of Blue-ray players to decline in the soon future. 

Non of the above factors causes the market supply curve of Blue-ray players to shift leftwards. 

Question 3 

When other things remain unchanged, what can be expected if Blue-ray movies become significantly cheaper? 

Consumers will demand more Blue-ray movies. 

Consumers will demand more Blue-ray players. 

Consumers will demand less DVD players (where Blue-ray players and DVD players are considered substitutes). 

All of the above are expected to occur when Blue-ray movies become significantly cheaper 

Question 4

Which of the following events is expected to cause the equilibrium quantity to rise? 

demand increases and supply decreases 

demand and supply both decrease 

demand decreases and supply increases 

demand and supply both increase

Question 5 

Knowing that coffee and tea are substitutes, suppose that the demand for coffee increases and, at the same time, the supply of the coffee decreases. What would surely happen in the tea market? 

The Demand for tea will go up because the price of coffee went up. 

The price of tea will go down because the price of coffee went up. 

The supply of tea will go down because the price of coffee went up. 

Not enough data exist to conclude what exactly will happen in the tea market. 

Question 6

Suppose that the demand decreased for 4K TVs and, at the same time, the supply of 4K TVs increased. What would happen in the market of 4K TVs? 

Equilibrium price would decrease, but the impact on the equilibrium quantity would be ambiguous. 

Equilibrium price would increase, but the impact on the equilibrium quantity would be ambiguous. 

Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. 

Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.

Question 7 

Other things remain unchanged, the demand for normal products is expected to increase when buyers' incomes go up.

True False 

Question 8 

When other things remain equal, buyers are expected to stock up from the normal product that they expect its market price to decline significantly in the soon future. 

True False 

Question 9 

Other things being equal, a shortage from soda is expected if both buyers and sellers believed the forecast that predicted a significant decline in the market price of soda. 

True False 

Question 10 

Knowing that peanut butter and jelly are complementary goods, what can be expected if the price of peanut butter goes up (other things being equal)? 

Buyers of peanut butter and jelly will move downward and to the right along the market demand curve for peanut butter. 

Buyers of peanut butter and jelly will shift their demand for jelly to the left. 

Market price of jelly will fall. 

All of the above are expected to occur.

Answer 1

Question 1: False Reason: A change in the price for a product change the quantity demanded and graphically represent the movement along the same demand curve. Thus, when the price decline, there will downward movement along the demand curve demanded indicating increase in quantity Question 2: Corect answer: Costs of producing a single Blue-ray player increases. Reason: A market supply suppliers etc. The supply fall in the number of suppliers. Here, when cost of production increase, it becomes expensive for firms to produce goods, thus shift the supply curve to the left curve shifts due to change in the cost of production, number of curve shifts left when there is increase in cost of production or Question 3: Correct answer: All the above are become significantly cheaper expected to occur when Blue-ray movies Reason: When the price of Blue-ray movies fall, the demand for blue-ray movies will increase. Since blue-ray movies and Blue-ray players are compliment goods, the demand for blue-ray players will increase. Since blue-ray players and DVD players are substitute goods, the demand for DVD players will fall Question 4: Correct answer: demand and supply both increase Reason: When the demand curve and supply curve shift rightward, the equilibrium quantity will increase Question 5: Correct answer: The demand for tea will go up because the price of coffee went up Reason: When the demand for coffee increase, the demand curve shifts to right, and when the supply for coffee decrease, the supply curve shifts to the left. This will definitely result in the rise in the price of coffee. Since coffee and tea are substitute goods, a rise in the price of coffee will increase the demand for tea. This is because consumers will find coffee expensive Question 6: Correct answer Equilibrium price decrease but the impact on the equilibrium quantity would be ambiguous Reason: When the demand decreases, the demand curve shifts to the left and when the supply increases, the supply curve shifts to the right. As a result, the equilibrium price fall But, the impact on equilibrium quantity depends on the extent of shift of both curves.

Question 7: True Reason: For a normal good, there is a direct relationship between the income of consumers and demand for the good. When income goes up, consumer prefer to demand more of normal goods, keeping other things constant. Question 8: False When consumers expect that the price of a good will go down in future, then they will demand less in the present and demand more in the future. Thus, they will not stock in present when the future prices are expected too fall Question 9: False Reason: When the future prices expected to fall, the consumers will demand less today, are and producers will supply more today. Thus, supply will exceed demand results in surplus Question 10: Correct answer: Market price of Jelly will fall Reason: Since peanut butter and Jelly are complimentary goods, the rise in price of peanut butter will decrease the demand for peanut butter and jelly. In the market of Jelly, the demand curve for Jelly shifts to the left and results in fall in the market price of Jelly