Question

Q83. A shift to the right in the demand curve for product A can be most reasonably explained by saying that:

a) consumer incomes declined, and they now want to buy less of “A” at each possible price

b) the price of A has increased and, as a result, consumers want to purchase less of it

c) consumer preferences have changed in favor of A so that they now want to buy more at each possible price

d) the price of A has declined and, as a result, consumers want to purchase more of it

Q84. Other things being equal, which of the following might shift the demand curve for gasoline to the left?

a) the discovery of vast new oil reserves in Alberta              b) a large decline in the price of automobiles  

c) the development of a low-cost electric automobile            d) an increase in the price of train and air transportation        

Q85. At the current price there is a shortage of a product. We would expect price to ------------------------

a) increase, quantity demanded to increase, and quantity supplied to decrease

b) decrease, quantity demanded to increase, and quantity supplied to decrease.

c) increase, quantity demanded to decrease, and quantity supplied to increase

d) increase, quantity demanded to increase, and quantity supplied to increase

Q86. A surplus of a product will arise when price is

a) below equilibrium with the result that quantity supplied exceeds quantity demanded

b) above equilibrium with the result that quantity demanded exceeds quantity supplied

c) above equilibrium with the result that quantity supplied exceeds quantity demanded

d) below equilibrium with the result that quantity demanded exceeds quantity supplied

Answer 1

a) "C"

consumer preferences have changed in favor of A so that they now want to buy more at each possible price, a shift to the right will increase the demand and increase the price in the market.

b) "C"

aN invention of the alternative fuel will shift the demand for the gasoline to the left.

c) "C"

Increase, quantity demanded to decrease, and quantity supplied to increase, as a shortage will put upward pressure on the price and decrease the demand at a higher price and increase the supply at a higher price.

d) "A"

when the price is above the equilibrium then the supply will exceed the demand in the market.