Question 3 (1 point) Which of the following will cause an increase in the demand

Question

Question 3 (1 point)

Which of the following will cause an increase in the demand for gasoline?

Question 3 options:

A) A decrease in the price of gasoline.

B) An increase in the price of crude oil (an input in gasoline production).

C) An increase in the incomes of buyers (assuming gasoline is a normal good).

D) A decrease in prices for public transportation.

Question 4 (1 point)

Bus travel and pawnshop services are common examples of

Question 4 options:

A) normal goods.

B) inferior goods.

C) substitute goods.

D) complementary goods.

Question 5 (1 point)

If the cost of lumber decreases, what will likely happen in the market for new houses?

Question 5 options:

The demand for houses will decrease.

The demand of houses will increase.

The supply for houses will decrease.

The supply for houses will increase.

Question 6 (1 point)

In accordance with the law of supply, both individual and market supply curves
are drawn

Question 6 options:

A) horizontal.

B) vertical.

C) downward sloping.

D) upward sloping.

Question 7 (1 point)

Which of the following would decrease the supply of airline travel?

Question 7 options:

A) a reduced number of airline travelers.

B) New airlines open and begin providing flights

C) Lower prices for airline tickets.

D) Higher fuel costs.

Question 8 (1 point)

What is the equilibrium price of oil?

Question 8 options:

$10 per barrel.

$15 per barrel.

$20 per barrel.

$25 per barrel.

Question 9 (1 point)

At what price would we observe a surplus of 200 million barrels of oil?

Question 9 options:

$10 per barrel.

$15 per barrel.

$20 per barrel.

$25 per barrel.

Question 10 (1 point)

Suppose the price of oil is unregulated and sellers are free to sell oil at any price. If the current price of oil is $15 per barrel, we can predict that the price of oil will

Question 10 options:

fall in the near future.

remain at $15 per barrel for the foreseeable future.

rise in the near future.

will fluctuate between $10 and $20 per barrel.

A) A decrease in the price of gasoline.

B) An increase in the price of crude oil (an input in gasoline production).

C) An increase in the incomes of buyers (assuming gasoline is a normal good).

D) A decrease in prices for public transportation.

Explanation / Answer

(Question 3) Option (C)

As consumer income rises, demand for a normal good also rises.

(Question 4) Option (B)

A consumer income rises (falls), demand for these goods falls (rises), so they are inferior goods.

(Question 5) Option (D)

A decrease in input cost lowers production cost, so supply of the final good increases.

(Question 6) Option (D)

As price rises (falls), quantity suplied rises (falls).

(Question 7) Option (D)

Higher input cost lowers supply.

(Question 8) Option (C)

Equilibrium is at intersection of demnd and supply curves, so price is $20.

(Question 9) Option (D)

Surplus = Quantity supplied - Quantity demanded = 200

This holds true when Price = $25, Quantity supplied = 400, Quantity demanded = 200

(Question 10) Option (C)

If price falls below equilibrium price, market forces pushes up price until equilibrium price is restored.

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