1. (6) Fill in the following table, indicating if there is an l Equilibrium P an
ID: 1130076 • Letter: 1
Question
1. (6) Fill in the following table, indicating if there is an l Equilibrium P and Q as a result of the shift(s) of the D and/ ncrease, Decrease, or Indeterminate change to or S curve. st, lt ndtema 2. (4) The Law of Demand is based on what 2 effects? 3. (8) In the following table, decide if the catalyst is a determinant of Supply and/or Demand. Then indicate what impact the catalyst will have on Demand and Supply in the markets indicated. (Write: increase, decrease or unchanged) Catalyst Price of steel increases Future prices of homes are expected to be lower Price of DVD players has decreased Price of margarine increases Market Automobiles Desrcase undhanged Real Estate Increas se DVD's unghanged rrease Butter Decxease 4. (3) A production possibilities curve (PPC) that represents 2 unlike products demonstrates what law? an 5. (3) Quantity Supplied (Qs) will change as a result of teamolgncal chang 36. (3) Overproduction of a good occurs when there is a negahve extemality present in the market that goes uncorrected. 7. (3) How can we tell if a product is an inferior good? income l, interorExplanation / Answer
1. Increase in S leads to Decrease in Price and Increase in Quantity
Increase in demand and supply leads to increase in Quantity and indeterminate change in Price
Increase in supply and decrease in demand leads to decrease in price and indeterminate change in quantity.
2. Income effect and substitution effect
3. Margarine and butter are substitutes of each other so increase in price of one leads to increase in demand of other and vice-versa.
Demand - Decrease
Supply - Unchanged
4. Law of increasing opportunity cost
5. Change in the price of commodity itself.
6. If demand of good decreases when income of consumer increases.
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