Question

1.Consider the market for coffee.Which of the following would cause supply to increase?
(A) A drought that reduces coffee bean yields.
(B) Fewer competitors in the market.
(C) The price of cocaine rises.
(D) Coffee prices are expected to decrease in the future.

2.Consider the market for Canadian university degrees. Which of the following would
cause supply to increase?
(A) Universities across Canada shut down.
(B) Good jobs, requiring only a high school degree, rise in availability.
(C) An increase in household income when degrees are normal goods.
(D) The government subsidizes university research and teaching.

3.Consider the market for philosophy textbooks. Which of the following would cause
supply to decrease?
(A) The price of paper decreases.
(B) A new printing press makes it cheaper and easier to print textbooks.
(C) Cogito, ergo sum.
(D) None of the above.

4.Consider the market for philosophy textbooks. Which of the following would cause
supply to decrease?
(A) The price of paper decreases.
(B) A new printing press makes it cheaper and easier to print textbooks.
(C) Cogito, ergo sum.
(D) None of the above.

5.Due to marijuana's legalization, Mary Jane Potter decides to open up a marijuana
shop. She is willing to sell a gram for a minimum price of $5.00. Her producer surplus,
once she sells a gram of marijuana, is $15.00. What is the market price of marijuana,
per gram?
(A) $10.00
(B) $15.00
(C) $5.00
(D) $20.00

Answer 1

1. (D) Coffee prices are expected to decrease in the future.
(If sellers anticipate lower prices then they will increase the supply so supply for coffee will shift rightward)

2. (D) The government subsidizes university research and teaching.
(As subsidy is provided to suppliers so supply will increase)

3. (D) None of the above.
(Supply will be increased because of option a and b)

4. (D) None of the above.
(Same as above)

5. (D) $20.00
(Market price = Producer surplus + minimum price = 15 + 5 = $20)