Question

15. A technological improvement in producing good A would cause 3. a movement upward and to the nght along the supply curve for A b. a shift to the right of the supply curve for A. c. a shift to the left of the supply curve for A. d. a movement downward and to the left along the supply curve for A 16.- Which of the following is true if the price of coffee increases? a. The demand for tea, a substitute good, will decrease. b. Both the demand for coffee and tea will increase. c. The demand for coffee will increase. d. The demand for tea, a substitute good, will increase. 17.- The law of demand is illustrated by a demand curve that is: a. horizontal b. downward-sloping. c. vertical d. upward-sloping 18.- Which of the following would not cause a shift in the supply curve for a good? a. An increase in demand for that good. b. An increase in the cost of labor used to produce that good. c. A change in the cost of raw materials used to produce that good. d. A decrease in the cost of machinery used to produce that good. 19.- An increase in the quantity demanded of a good is most often due to: a, a decrease in the price of a substitute good. b. higher prices. c. an increase in wages paid to workers. d. lower prices. 20.- An increase in the supply of the product implies: a. producers will now charge a lower price for a given quantity of output

Answer 1

15) Technological improvement helps producer in producing goods in less time and with usage of lesser resources which reduces the cost of producing goods, thus raising the supply. Thus option B is correct.

16) If price of coffee increases, demand for tea will increase as these both goods are substitute goods and can be replaced with on other. As consumers are rational, they try to lower the consumption cost. Thus option D is correct.

17) Law of demand states that demand curve is downward sloping which means price and quantity demanded have inverse relationship with each other. Thus option B is correct.

18) Option A is correct as increased demand for a good would not shift the supply in short run.

19) The only factor which cause change in quantity demanded is the price. Thus when price falls, there is increase in quantity demanded.