Question

QUESTION 31

1. Market: Automobiles

   Event: The Economist publishes an article stating that the price of automobiles will skyrocket in the coming months.

   Question: What is the determinant of Supply?

   	a.	None
   	b.	Price of goods made with same resources
   	c.	Technology
   	d.	Price of inputs
   	e.	Expectation of future price changes
   	f.	Number of sellers

3 points   

QUESTION 32

1. Market: Automobiles

   Event: The Economist publishes an article stating that the price of automobiles will skyrocket in the coming months.

   Question: What is the determinant of demand?

   	a.	None
   	b.	Consumer preferences
   	c.	Price of related goods
   	d.	Income of consumers
   	e.	Expectation of future price changes
   	f.	Number of buyers in the market

3 points   

QUESTION 33

1. Market: Automobiles

   Event: The Economist publishes an article stating that the price of automobiles will skyrocket in the coming months.

   Question: What is the change in supply?

   	a.	Increase
   	b.	Decrease
   	c.	No change
   	d.	Indeterminate

3 points   

QUESTION 34

1. Market: Automobiles

   Event: The Economist publishes an article stating that the price of automobiles will skyrocket in the coming months.

   Question: What is the change in demand?

   	a.	Increase
   	b.	Decrease
   	c.	No change
   	d.	Indeterminate

3 points   

QUESTION 35

1. Market: Automobiles

   Event: The Economist publishes an article stating that the price of automobiles will skyrocket in the coming months.

   Question: What will the change in equilibrium price be?

   	a.	Increase
   	b.	Decrease
   	c.	No change
   	d.	Indeterminate

3 points   

QUESTION 36

1. Market: Automobiles

   Event: The Economist publishes an article stating that the price of automobiles will skyrocket in the coming months.

   Question: What will the change in equilibrium quantity be?

   	a.	Increase
   	b.	Decrease
   	c.	No change
   	d.	Indeterminate

Answer 1

31. e) Expectation of future price changes

32. e) Expectation of future price changes

33. b) Decrease

When sellers expect that price will rise in future then current supply of automobiles decreases in order to sell more in future.

34. a) Increase

When consumers expect that price will rise in future then current demand of automobiles increases.

35. a) Increase

Leftward shift of supply and rightward shift of demand causes increase in equilibrium price.

36. d) Indeterminate

Leftward shift of supply and rightward shift of demand causes indeterminate change in equilibrium quantity. Quantity can increase, decrease or remains same depends on the magnitude of shift of demand and supply curve.