Question

1. The price of fresh fish rose and the quantity sold fell. Other things remaining the same, which of the following is consistent with this observation? A)The fishermen learned to fish more efficiently. B)The cost of fishing increased. C)The supply of fresh fish increased. D)The number of consumers that have a preference for fish increased. E)The price of meat, which is a substitute for fish, rose.

2.If the price of a good increases and is above the equilibrium price, then: A)the demand curve will shift to the left until equilibrium is established at the new higher prices. B)the supply curve will shift to the right until equilibrium is established at the new higher price. C)consumers will bid down the good’s price, but there will be no reduction in output. D)suppliers’ inventories will build up, they will reduce output, and lower prices. E)demand will exceed supply and there will be a shortage in the market.

3.Suppose a severe freeze damages the Florida orange crop. Everything else remaining unchanged, which of the following is most likely to be true? A)Both the output and the price of oranges will decrease. B)The output of oranges will fall and the price will increase. C)Both the supply curve and the demand curve for oranges will shift to the left. D)The supply curve for oranges will shift to the right. E)Because of the shortage of oranges, consumers will reduce their demand in order to economize.

Answer 1

a) If the price of the fresh fishes increased and the quantity decreased it means the supply curve has shifted to the left. It happens only when the input cost increases. The answer is "B" the cost of fishing increased.

b) IF the price is above the equilibrium price the demand will be low and the inventory will rise because the supply will be more at a higher price. In such a case, the supplier will reduce the output and lower the prices. the answer is "D".

c) The output will be affected and the demand will remain the same increasing the price. the answer is "B". The output will fall and the price will increase.