Question

(Tricky -- or at least hard.) Suppose we observe price and quantity both falling. What does that tell us about changes in demand and supply?

A- Demand must have fallen and supply must have been unchanged.

B- Demand must have fallen; supply may either have risen, fallen, orremained unchanged.

C- Supply and demand must both have fallen.

D- Supply must have fallen; demand must either have fallen or remained unchanged.

If there is an increase in the overall level of demand and an increase in the overall level of supply, then

A- we know quantity will decrease, but can't predict what will happen with price.

B- we know price will increase, but can't predict what will happen with quantity.

C- we know price will decrease, but can't predict what will happen with quantity.

D- we know quantity will increase, but can't predict what will happen with price.

Crude oil is used to make diesel. Suppose crude oil prices rise. If the price of diesel remains unchanged,

A- quantity supplied will remain unchanged, but quantity demanded will fall. So there will be a surplus of unsold diesel.

B- quantity supplied will rise, but quantity demanded will remain unchanged. So there will be a surplus of unsold diesel.

C- quantity supplied will remain unchanged, but quantity demanded will rise. So there will be a shortage of diesel.

D- quantity supplied will fall, but quantity demanded will remain unchanged. So there will be a shortage of diesel.

An increase in the current price of gold causes

A- a movement up and to the right along the current gold supply curve.

B- a movement up and to the right along the current gold supply curve andthe current gold supply curve shifts right.

C- the current gold supply curve to shift right.

D- None of these.

Answer 1