Supply & Demand A
Multiple Choice
Identify the choice that best completes the statement or answers the question.
_B___ 1. Which of the following will result in an increased price of milk?
A.
a shift to the right of the supply curve for milk
B.
a shift to the right of the demand curve for milk
C.
an increase in the number of milk suppliers
D.
a decrease in the number of milk buyers
E.
an increase in the production technology of milk suppliers.
__A__ 2. A shift of a demand curve to the right, all other things unchanged, will:
A.
increase equilibrium price and quantity.
B.
decrease equilibrium price and quantity.
C.
decrease equilibrium quantity and increase equilibrium price.
D.
increase equilibrium quantity and decrease equilibrium price.
E.
increase equilibrium price while leaving equilibrium quantity unchanged.
___C_ 3. The market for milk is initially in equilibrium. Assume that an advertising campaign succeeds in shifting consumer tastes toward drinking milk. Due to the increased popularity of milk, more milk producers enter the market. Standard demand and supply analysis tells us that:
A.
the equilibrium price and quantity of milk will rise.
B.
the equilibrium price and quantity of milk will fall.
C.
the equilibrium quantity of milk will rise, but we can't determine how the equilibrium price will be affected.
D.
the equilibrium price of milk will rise, but we can't determine how the equilibrium quantity will be affected.
E.
the equilibrium price will fall, and the equilibrium quantity of milk will rise.
__A__ 4. The market for soybeans is initially in equilibrium. Because of “mad cow disease,” producers decide to replace bone meal with soybeans in cattle feed. The likely effect is that:
A.
the equilibrium price and quantity of soybeans will rise.
B.
the equilibrium price and quantity of soybeans will fall.
C.
the equilibrium quantity of soybeans will rise, but we can't determine what will happen to the equilibrium price.
D.
the equilibrium price of soybeans will rise, but we can't determine what will happen to the equilibrium quantity.
E.
there is likely to be no impact on the soybean market.
Figure 7-1: Demand and Supply of Gasoline
___A_ 5. Use the “Demand and Supply of Gasoline” Figure 7-1. Given the equilibrium after a change in supply from S1 to S2:
A.
at the old price of $2.50, there will be pressure for the price to fall.
B.
the new price will be $2.00.
C.
the new quantity will be 600 gallons.
D.
the price will remain constant.
E.
the new quantity will be 100 gallons.
__B__ 6. Use the “Demand and Supply of Gasoline” Figure 7-1. When the supply curve shifted from S1 to S2, the new intersection of supply and demand has a price of ________ and quantity of 400. This could have resulted from ________.
A.
$1.50; an increase in consumers' income if gasoline is a normal good
B.
$1.50; an increase in refining technology
C.
$2.00; an increase in the number of buyers
D.
$2.00; an increase in consumers' income
E.
$1.50; an increase in the pr...
