Question

26. Which of the following pairs of goods are most likely to be substitutes in demand?
(A) Tea and sugar.
(B) Bidets and toilet paper.
(C) Cars and gasoline.
(D) PlayStation 5 and Coca-Cola.
27. Consider the following demand equation:
q = 600 − 2p
What is the Consumer Surplus when p
∗ = 200?
(A) $40,000.
(B) $80,000.
(C) $20,000.
(D) $10,000.
28. Fill in the blanks. In a market with supply and demand, if the supply curve shifts
to the left, then the new equilibrium price will be than before, and the new
equilibrium quantity will be than before.
(A) Lower; Higher.
(B) Higher; Lower.
(C) Higher; Higher.
(D) Lower; Lower.
29. Fill in the blanks. In a market with supply and demand, if the supply curve shifts
to the left, then the new equilibrium price will be than before, and the new
equilibrium quantity will be than before.
(A) Lower; Higher.
(B) Higher; Lower.
(C) Higher; Higher.
(D) Lower; Lower.

Answer 1

Answer:

OPTION B: Bidets and toilet paper

Reason: Bidets (oval shaped basin used for washing genitals) can be used in place of toilet paper for cleanliness of genital area, hence bidets and toilet papers are substitutes.

Answer 2:

OPTION D: $10,000

Reason: Given the demand equation : q= 600-2p

If q = 0, p = 600/2 = 300

And if the current price is 200 (given, quantity = 600-2(200) = 200

Consumer surplus = 1/2 * (300-200) * 200

= 1/2 * 100 * 200

= $10,000

Answer 3:

OPTION B: Higher; Lower

Reason: When supply curve shifts leftwards, it means there is a decrease in supply. Demand remaining constant, the quantity will fall down and price will go up. In other words, the new equilibrium price will be higher than before and the new equilibrium demand will be lower than before due to fall in supply.

Answer 4:

SAME AS ANSWER 3

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