Question

1. The supply of leather jackets would be expected to increase as a result of:

		A)        an increase in the cost of producing leather jackets.
		B)        an increase in the price of leather jackets
		C)        an increase in the popularity of leather jackets.
		D)        the expectation that the price of leather jackets will fall in the future.

3 points   

QUESTION 12

1. The law of supply states that, other things constant, there is a(n) __________ relation between price and ______________.

            A) inverse; quantity supplied.                             .

            B)   inverse; supply.                                               

C)        direct; quantity supplied

D)        direct; supply.

		A)        inverse; quantity supplied.
		B)        inverse; supply.
		C)        direct; quantity supplied
		D)        direct; supply.

3 points   

QUESTION 13

1. Which of the following would be expected to cause an increase in the supply of fax machines?

		A)        An increase in the number of business firms demanding fax machines.
		B)        An increase in the price of fax machines.
		C)        An increase in the cost of manufacturing fax machines.
		D)        The expectation that the price of fax machines will fall in future.

3 points   

QUESTION 14

1. When the going rate is $2.00 per hour, Ann wants to babysit 12 hours each week and Pat wants to babysit 8 hours each week. If the rate goes up to $4.00, Ann and Pat both double the number of hours they are willing to babysit each week. Based on this information, a combined supply curve will pass through the points:

		A)        price = $2.00, quantity supplied = 20 and price = $4.00, quantity supplied = 40.
		B)        price = $2.00, quantity supplied = 10 and price = $4.00, quantity supplied = 20.
		C)        price = $2.00, quantity supplied = 6 and price = $4.00, quantity supplied = 4.
		D)        price = $2.00, quantity supplied = 4 and price = $4.00, quantity supplied = 6

3 points   

QUESTION 15

1. If current quantity demanded is 500 and current quantity supplied is 1,000, this is an indication that:

		A)        the current price is below the equilibrium price
		B)        producers are not responsive to price changes.
		C)        the current price is above the equilibrium.
		D)        consumers of this particular item do not buy less of it when its price increases

3 points   

QUESTION 16

1. If supply and demand intersect at a price of $5.00, then a reduction in price from $6.00 to $5.00 will cause a decrease in quantity:

A)        supplied, a decrease in quantity demanded, and the alleviation of a shortage.

B)        demanded, a decrease in quantity supplied, and the alleviation of a shortage.

C)        supplied, an increase in quantity demanded, and the alleviation of a surplus.

D)        demanded, a decrease in quantity supplied, and the alleviation of a surplus.

1. The supply of leather jackets would be expected to increase as a result of:

		A)        an increase in the cost of producing leather jackets.
		B)        an increase in the price of leather jackets
		C)        an increase in the popularity of leather jackets.
		D)        the expectation that the price of leather jackets will fall in the future.

3 points   

QUESTION 12

1. The law of supply states that, other things constant, there is a(n) __________ relation between price and ______________.

            A) inverse; quantity supplied.                             .

            B)   inverse; supply.                                               

C)        direct; quantity supplied

D)        direct; supply.

		A)        inverse; quantity supplied.
		B)        inverse; supply.
		C)        direct; quantity supplied
		D)        direct; supply.

3 points   

QUESTION 13

1. Which of the following would be expected to cause an increase in the supply of fax machines?

		A)        An increase in the number of business firms demanding fax machines.
		B)        An increase in the price of fax machines.
		C)        An increase in the cost of manufacturing fax machines.
		D)        The expectation that the price of fax machines will fall in future.

3 points   

QUESTION 14

1. When the going rate is $2.00 per hour, Ann wants to babysit 12 hours each week and Pat wants to babysit 8 hours each week. If the rate goes up to $4.00, Ann and Pat both double the number of hours they are willing to babysit each week. Based on this information, a combined supply curve will pass through the points:

		A)        price = $2.00, quantity supplied = 20 and price = $4.00, quantity supplied = 40.
		B)        price = $2.00, quantity supplied = 10 and price = $4.00, quantity supplied = 20.
		C)        price = $2.00, quantity supplied = 6 and price = $4.00, quantity supplied = 4.
		D)        price = $2.00, quantity supplied = 4 and price = $4.00, quantity supplied = 6

3 points   

QUESTION 15

1. If current quantity demanded is 500 and current quantity supplied is 1,000, this is an indication that:

		A)        the current price is below the equilibrium price
		B)        producers are not responsive to price changes.
		C)        the current price is above the equilibrium.
		D)        consumers of this particular item do not buy less of it when its price increases

3 points   

QUESTION 16

1. If supply and demand intersect at a price of $5.00, then a reduction in price from $6.00 to $5.00 will cause a decrease in quantity:

		A)        supplied, a decrease in quantity demanded, and the alleviation of a shortage.
		B)        demanded, a decrease in quantity supplied, and the alleviation of a shortage.
		C)        supplied, an increase in quantity demanded, and the alleviation of a surplus.
		D)        demanded, a decrease in quantity supplied, and the alleviation of a surplus.

Answer 1

11. D) the expectation that the price of leather jackets will fall in the future.
(As price is expected to fall in future so current supply will increase.)

12. C) direct; quantity supplied
(According to law of supply, price and Qs are directly related.)

13. D) The expectation that the price of fax machines will fall in future.
(Expected decrease in price in future will increase current supply.)

14. A) price = $2.00, quantity supplied = 20 and price = $4.00, quantity supplied = 40.
(At $2, Qs = 12 + 8 = 20
At $4, Qs = 2*12 + 2*8 == 24 + 16 = 40)

15. C) the current price is above the equilibrium.
(As QS > QD, so, price is above equilibrium.)

16. C) supplied, an increase in quantity demanded, and the alleviation of a surplus
(As price decreases, Qs decreases, Qd increases.)

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