Question

1. When an economist states the supply of a product has decreased, he or she has concluded that

a. a smaller quantity will be produced at every point

b. the price is too high for equilibrium

c. a greater quantity will be produced at every price.

d. the price is too low for equilibrium

e. demand was too high for producers to make a profit

2. If quantity supplied exceeds quantity demanded,

a. a shortage exists and the price will decrease in the near future because buyers will competitively bid down the price

b. a shortage exists and the price will increase in the near future because sellers will competitively bid up the price

c. a surplus exists and the price will decrease in the near future because sellers will competitively bid down the price

d. a surplus exists and the price will increase in the near future because buyers will competitively bid up the price

3. In which of the following statements are the terms "demand", "supply", "quantity demanded" and "quantity supplied" used correctly?

a. changes in demand and supply causes change in equilibrium price

b. if the prices rises, supply rises

c. the price of oranges is cheaper in Florida and therefore the demand is greater in Florida

d. when supply exceeds demand the equilibrium prices will rise

e. all of above

Answer 1

1. Option A

Explanation: When there is a decrease in supply, there is a lower quantity supplied at each price. So, the supply curve shifts left.

2. Option C

Explanation: In surplus, quantity supplied is greater than quantity demanded. In shortage, quantity demanded is greater than quantity supplied.

When there is a surplus, price would fall in the future.

3. Option A

Explanation: When there is a change in supply or demand, there is a shift in these curves and the price changes.

Quantity demanded or supplied change with a change in price.