nces Mailings ·A-1 ! :-- 2.E. | | Heading 2 T Normal T No Spac Hea Paragraph 6.
ID: 1138813 • Letter: N
Question
nces Mailings ·A-1 ! :-- 2.E. | | Heading 2 T Normal T No Spac Hea Paragraph 6. A simultaneous increase in demand and supply will unambiguously A) raise the equilibrium price. 0 B) lower the equilibrium price. O C) lower the equilibrium quantity D) raise the equilibrium quantity 7. A surplus (excess supply) is the difference between the O A) market price and the minimum price required to induce production. O B) market price and the maximum willingness to pay of consumers. O C) quantity demanded and the quantity supplied at the market price. O D) full economic price and the minimum price required to induce production. 8. Which of the following is most likely to shift the supply curve for electricity to the night? A) Consumers becoming mor B) An increase in income. D C) A decrease in the price of coal, an input to producing electricity. 0 D) An decrease in the price of natural gas, a substitute source of energy e energy conscious 9. Holding all else constant, as additional firms enter an industry A) more output is available at each given price. B) less output is available at each given price 0 C) the same output is available at each given price. 0 D) Unable to tell. 10 In a competitive market, the market demand is Qd- 48-5P and the market supply is Qs 7P. The equilibrium quantity is D A) 35 units B) 21 unit c) 42 units. D) 2S units.Explanation / Answer
(6) (D)
Increase in demand will shift demand curve rightward, raising both price & quantity. Increase in supply will shift supply curve rightward, lowering price & raising quantity. So quantity definitely increases, but net effect on price is uncertain.
(7) (C)
When quantity supplied is more than quantity supplied, the difference equals a surplus or excess supply.
(8) (C)
Decrease in input price decreases production cost, which increases output and market supply, shifting supply curve rightward.
(9) (A)
Increased number of sellers increases market supply, shifting supply curve rightward so that more quantity is sold at each price.
(10) (D)
In equilibrium, Qd = Qs
48 - 5P = 7P
12P = 48
P = 4
Q = 7 x 4 = 28
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