Question 1

Temporary shortages in a market are eliminated by

Accepted Answer

A)   decreases in the price, which cause quantity supplied to fall and quantity demanded to rise.
B)   decreases in the price, which cause quantity supplied to rise and quantity demanded to fall.
C)   increases in the price, which cause quantity supplied to fall and quantity demanded to rise.
D)   increases in the price, which cause quantity supplied to rise and quantity demanded to fall.E) None of the above
F) C) and D)

Question 2

Which of the following are the best examples of substitute goods?

Accepted Answer

A)   Personal computers and computer software programs.
B)   Milk and cookies.
C)   Samsung Galaxy and Apple iPhone.
D)   Hot dogs and mustard.E) None of the above
F) A) and B)

Question 3

Suppose consumer tastes shift toward the consumption of apples. Which of the following statements is an accurate description of the impact of this event on the market for apples?

Accepted Answer

A)   There is an increase in the quantity demanded of apples and in the supply for apples.
B)   There is an increase in the demand and supply of apples.
C)   There is an increase in the demand for apples and a decrease in the supply of apples.
D)   There is a decrease in the quantity demanded of apples and an increase in the supply for apples.
E)   There is an increase in the demand for apples and an increase in the quantity supplied of apples.F) B) and D)
G) A) and B)

Question 4

An increase in the number of tomato producers will

Accepted Answer

A)   increase market supply because the price of tomatoes will rise.
B)   increase market supply because market demand will increase as more tomatoes are produced.
C)   increase market supply because market supply is the sum of all the individual tomato producers' supply curves.
D)   increase market demand but leave market supply unchanged.E) All of the above
F) A) and B)

Question 5

If an increase in the price of coffee leads to an increase in the demand for tea, then coffee and tea are likely to be

Accepted Answer

A)   complements.
B)   inferior goods.
C)   normal goods.
D)   substitutes.E) A) and D)
F) A) and C)

Question 6

List at least five of the seven assumptions upon which the model of supply and demand is based.

Accepted Answer

1. There are many buyers and sellers in ...

Question 7

Suppose that the demand for apples increased more than the supply of apples increased. The net effect of these two changes would be

Accepted Answer

A)   an increase in the equilibrium price and a decrease in the equilibrium quantity.
B)   an increase in the equilibrium price and an increase in the equilibrium quantity.
C)   a decrease in the equilibrium price and an increase in the equilibrium quantity.
D)   a decrease in the equilibrium price and a decrease in the equilibrium quantity.E) None of the above
F) A) and D)

Question 8

If the price of a good is above the equilibrium price,

Accepted Answer

A)   there is a surplus and the price will rise.
B)   there is a shortage and the price will fall.
C)   there is a shortage and the price will rise.
D)   the quantity demanded is equal to the quantity supplied and the price remains unchanged.
E)   there is a surplus and the price will fall.F) A) and B)
G) A) and E)

Question 9

When the price of a good is below the equilibrium price, it causes a surplus.

Accepted Answer

A) True 
 B)False

Question 10

Higher wages in the South African car industry would __________ the prices of South African-made cars and __________ the quantity traded.

Accepted Answer

A)   lower; lower
B)   lower; raise
C)   raise; lower
D)   raise; raiseE) A) and B)
F) A) and C)

Question 11

Which one of the following is most likely to be an inferior good?

Accepted Answer

A)   Car rides.
B)   Bus rides.
C)   Taxi rides.
D)   Truck rides.E) B) and C)
F) All of the above

Question 12

In a market economy, supply and demand determine

Accepted Answer

A)   both the quantity of each good produced and the price at which it is sold.
B)   the quantity of each good produced, but not the price at which it is sold.
C)   the price at which each good is sold, but not the quantity of each good produced.
D)   neither the quantity of each good produced nor the price at which it is sold.E) None of the above
F) C) and D)

Question 13

a) Given the table below, graph the demand and supply curves for flashlights. Make certain to label the equilibrium price and equilibrium quantity.
 $\begin{array}{|c|c|c|}
\hline \text { Price } & \begin{array}{c}
\text { Quantity Demanded } \
\text { Per Month }
\end{array} & \begin{array}{c}
\text { Quantity Supplied } \
\text { Per Month }
\end{array} \
\hline \text { R50 } & 6000 & 10000 \
\hline \text { R40 } & 8000 & 8000 \
\hline \text { R30 } & 10000 & 6000 \
\hline \text { R20 } & 12000 & 4000 \
\hline \text { R10 } & 14000 & 2000 \
\hline
\end{array}$ b) What is the equilibrium price and the equilibrium quantity?
c) Suppose the price is currently R50. What problem would exist in the market? What would you expect to happen to price? Show this on your graph.
d) Suppose the price is currently R20. What problem would exist in the market? What would you expect to happen to price? Show this on your graph.

Accepted Answer

a.

b. The equilibrium price (Pe) is R4...

Question 14

An advance in the technology employed to manufacture affordable smartphones will result in a decrease in the equilibrium price and an increase in the equilibrium quantity bought and sold in the market for affordable smartphones.

Accepted Answer

A) True 
 B)False

Question 15

The quantity demanded refers to the amount consumers are willing and able to purchase at different prices. Why is it important that consumers are not only willing, but also able to buy in analysing demand?

Accepted Answer

Supply and demand are the forces that ma...

Question 16

Suppose a frost destroys much of the Mpumalanga orange crops. At the same time, suppose consumer tastes shift toward orange juice. What would we expect to happen to the equilibrium price and quantity in the market for orange juice?

Accepted Answer

A)   Price will decrease; quantity is ambiguous.
B)   The impact on both price and quantity is ambiguous.
C)   Price will increase; quantity will increase.
D)   Price will increase; quantity will decrease.
E)   Price will increase; quantity is ambiguous.F) B) and D)
G) C) and E)

Question 17

If a drought destroyed half of the Western Cape wine crop at a time when the health benefits of red wine were being well publicised, economists would expect that in the market for wine

Accepted Answer

A)   quantity exchanged would rise but the change in price is uncertain without further information.
B)   price would rise but the change in quantity exchanged is uncertain without further information.
C)   both price and quantity exchanged would rise.
D)   price would rise and quantity exchanged would fall.E) B) and C)
F) A) and D)

Question 18

If the price of a good is equal to the equilibrium price,

Accepted Answer

A)   there is a shortage and the price will fall.
B)   the quantity demanded is equal to the quantity supplied and the price remains unchanged.
C)   there is a surplus and the price will rise.
D)   there is a shortage and the price will rise.
E)   there is a surplus and the price will fall.F) A) and B)
G) C) and E)

Question 19

Suppose we are analysing the market for hot chocolate. Graphically illustrate the impact each of the following would have on demand or supply. Also, show how equilibrium price and equilibrium quantity would change.
a) Winter starts, and the weather turns sharply colder.
b) The price of tea, a substitute for hot chocolate, falls.
c) The price of cocoa beans decreases.
d) The price of whipped cream falls.
e) A better method of harvesting cocoa beans is introduced.
f) The Department of Health announces that hot chocolate cures bad skin.
g) Protesting farmers dump millions of litres of milk, causing the price of milk to rise.
h) Consumer income falls because of a recession, and hot chocolate is considered a normal good.
i) Producers expect the price of hot chocolate to increase next month.
j) Currently, the price of hot chocolate is R5 per cup above equilibrium.

Accepted Answer

A)11ecba45_6b90_20b9_9548_7572c4e4ecaf_T...

Question 20

If there is a shortage of a good, then the price of that good tends to fall.

Accepted Answer

A) True 
 B)False

Exam 3: The Market Forces of Supply and Demand

Suppose that the demand for apples increased more than the supply of apples increased. The net effect of these two changes would be

Correct Answer
verified

The quantity demanded refers to the amount consumers are willing and able to purchase at different prices. Why is it important that consumers are not only willing, but also able to buy in analysing demand?

Correct Answer
verified
Supply and demand are the forces that ma...
View Answer

If there is a shortage of a good, then the price of that good tends to fall.

Correct Answer
verified

Suppose consumer tastes shift toward the consumption of apples. Which of the following statements is an accurate description of the impact of this event on the market for apples?

Correct Answer
verified

Which of the following are the best examples of substitute goods?

Correct Answer
verified

If the price of a good is equal to the equilibrium price,

Correct Answer
verified

When the price of a good is below the equilibrium price, it causes a surplus.

Correct Answer
verified

If a drought destroyed half of the Western Cape wine crop at a time when the health benefits of red wine were being well publicised, economists would expect that in the market for wine

Correct Answer
verified

Suppose a frost destroys much of the Mpumalanga orange crops. At the same time, suppose consumer tastes shift toward orange juice. What would we expect to happen to the equilibrium price and quantity in the market for orange juice?

Correct Answer
verified

An advance in the technology employed to manufacture affordable smartphones will result in a decrease in the equilibrium price and an increase in the equilibrium quantity bought and sold in the market for affordable smartphones.

Correct Answer
verified

Higher wages in the South African car industry would the prices of South African-made cars and the quantity traded.

Correct Answer
verified

Temporary shortages in a market are eliminated by

Correct Answer
verified

Correct Answer
verified
A)11ecba45_6b90_20b9_9548_7572c4e4ecaf_T...
View Answer

An increase in the number of tomato producers will

Correct Answer
verified

In a market economy, supply and demand determine

Correct Answer
verified

Which one of the following is most likely to be an inferior good?

Correct Answer
verified

If the price of a good is above the equilibrium price,

Correct Answer
verified

Correct Answer
verified
a.
b. The equilibrium price (Pe) is R4...
View Answer

If an increase in the price of coffee leads to an increase in the demand for tea, then coffee and tea are likely to be

Correct Answer
verified

List at least five of the seven assumptions upon which the model of supply and demand is based.

Correct Answer
verified
1. There are many buyers and sellers in ...
View Answer

Exam 3: The Market Forces of Supply and Demand

Suppose that the demand for apples increased more than the supply of apples increased. The net effect of these two changes would be

Correct AnswerverifiedShow Answer

The quantity demanded refers to the amount consumers are willing and able to purchase at different prices. Why is it important that consumers are not only willing, but also able to buy in analysing demand?

Correct AnswerverifiedSupply and demand are the forces that ma...View AnswerShow Answer

If there is a shortage of a good, then the price of that good tends to fall.

Correct AnswerverifiedShow Answer

Suppose consumer tastes shift toward the consumption of apples. Which of the following statements is an accurate description of the impact of this event on the market for apples?

Correct AnswerverifiedShow Answer

Which of the following are the best examples of substitute goods?

Correct AnswerverifiedShow Answer

If the price of a good is equal to the equilibrium price,

Correct AnswerverifiedShow Answer

When the price of a good is below the equilibrium price, it causes a surplus.

Correct AnswerverifiedShow Answer

If a drought destroyed half of the Western Cape wine crop at a time when the health benefits of red wine were being well publicised, economists would expect that in the market for wine

Correct AnswerverifiedShow Answer

Suppose a frost destroys much of the Mpumalanga orange crops. At the same time, suppose consumer tastes shift toward orange juice. What would we expect to happen to the equilibrium price and quantity in the market for orange juice?

Correct AnswerverifiedShow Answer

An advance in the technology employed to manufacture affordable smartphones will result in a decrease in the equilibrium price and an increase in the equilibrium quantity bought and sold in the market for affordable smartphones.

Correct AnswerverifiedShow Answer

Higher wages in the South African car industry would __________ the prices of South African-made cars and __________ the quantity traded.

Correct AnswerverifiedShow Answer

Temporary shortages in a market are eliminated by

Correct AnswerverifiedShow Answer

Correct AnswerverifiedA)11ecba45_6b90_20b9_9548_7572c4e4ecaf_T...View AnswerShow Answer

An increase in the number of tomato producers will

Correct AnswerverifiedShow Answer

In a market economy, supply and demand determine

Correct AnswerverifiedShow Answer

Which one of the following is most likely to be an inferior good?

Correct AnswerverifiedShow Answer

If the price of a good is above the equilibrium price,

Correct AnswerverifiedShow Answer

Correct Answerverifieda. b. The equilibrium price (Pe) is R4...View AnswerShow Answer

If an increase in the price of coffee leads to an increase in the demand for tea, then coffee and tea are likely to be

Correct AnswerverifiedShow Answer

List at least five of the seven assumptions upon which the model of supply and demand is based.

Correct Answerverified1. There are many buyers and sellers in ...View AnswerShow Answer

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Supply and demand are the forces that ma...
View Answer

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Higher wages in the South African car industry would the prices of South African-made cars and the quantity traded.

Correct Answer
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Correct Answer
verified
A)11ecba45_6b90_20b9_9548_7572c4e4ecaf_T...
View Answer

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a.
b. The equilibrium price (Pe) is R4...
View Answer

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1. There are many buyers and sellers in ...
View Answer