19) If price rises, what happens to quantity supplied for a product? a. It incre

Question

19) If price rises, what happens to quantity supplied for a product? a. It increases. b. It decreases. c. It does not change. d. Quantity supplied is constant, but supply increases. 20) The mechanism of supply and demand is a. a fundamental tool in both microeconomics and macroeconomics. b. the only real "law" of economics. c. a fundamental tool only in microeconomics. d. a fundamental tool only in macrocconomics. 21) A shift in the supply curve of bicycles resulting from higher steel prices will lead to a. b. c. d. e. higher prices of bicycles. lower prices of bicycles. a shift in the demand curve for bicycles. larger output of bicycles. no change in the price of bicycles. Suppose Bean's Backpacks have the following supply and demand functions: Q -200-3P Qs 25 + 2P 22) What is the equilibrium price for Bean's Backpacks? 23) What is the equilibrium quantity for Bean's Backpacks?

Explanation / Answer

Ans:

19) Option A

It increases

The increase in the price of a product increases the quantity supplied of the product.

20) Option C

a fundamental tool only in microeconomics

The law of supply and demand is the basic microeconomics law and helps to understand market mechanism of how resources are allocated.

21) Option A

higher prices of bicycles.

Higher steel prices increases the cost of production of bicycles.This decreases the supply of bicycles and the supply curve will shift to the left causing the price of bicycles to increase.

22) equilibrium price = $35

23) equilibrium quantity = 95 units

when the market is in equilibrium, quantity demanded is equal to quantity supplied.

Qd = Qs

200 - 3P = 25 + 2P

200 - 25 = 2P + 3P

175 = 5P

P = 175 / 5

P = 35

Hence the equilibrium price is $35

Equilibrium quantity = 200 - 3(35)

= 200 - 105

= 95

Hence the equilibrium quantity is 95 units.

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