Question

Question 31 (1 point)

A decrease in the price of gasoline will cause an increase in the supply of gasoline.

Question 31 options:

True

False

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Question 32 (1 point)

When there is a decrease in both supply and demand, the effect on equilibrium price is indeterminate(or ambiguous).

Question 32 options:

True

False

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Question 33 (1 point)

An increase in demand accompanied by an increase in supply will increase the equilibrium quantity but the effect on equilibrium price will be indeterminate(or ambiguous).

Question 33 options:

True

False

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Question 34 (1 point)

The simple circular flow model shows that workers, entrepreneurs, and the owners of land and capital offer(or sell) their resources through:

Question 34 options:

Product Markets

Resource(or Factor) markets

Employment Agencies

Business Firms

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Question 35 (1 point)

If two goods are substitutes:

Question 35 options:

They are always consumed jointly

An increase in the price of one will reduce the demand for the other

A decrease in the price of one will decrease the demand for the other

all of the above

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Question 36 (1 point)

The major advantage of the competitive market system is that it:

Question 36 options:

allocates economic resources efficiently

results in an equitable(fair) distribution of income and always maintains full employment.

results in price level stability and a fair personal distribution of income.

eliminates discrimination and minimizes environmental pollution.

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Question 37 (1 point)

An effective price ceiling imposed on a market tends to:

Question 37 options:

Increase consumer surplus

Increase producer surplus

Reduce total surplus

reduce producer surplus only

Answer 1

31. False

There is direct relationship between price of commodity and its quantity supplied. So decrease in price decreases its supply while increases its demand.

32. True

Decrease in both demand and supply causes decrease in quantity demanded for sure but effect on price depends upon the magnitude of shifts of demand and supply curve. So, it can cause increase, decrease or no change in equilibrium price.

33. True

Increase in both curve causes increase in quantity but effect on price is ambiguous.

34. Resource(or Factor) markets

Workers provide labor, land owners provide land. Land, labor and capital are factors of production.

35. A decrease in the price of one will decrease the demand for the other

Substitute goods are those goods which are used in place of one another. Increase in price of one good causes increase in the demand of its substitute good and vice-versa.