Suppose we observe the following two simultaneous events in the market for beef. First, there is a decrease in the demand for beef due to changes in consumer tastes.
And second, there is a reduction in supply due to cattle farmers selling their land to real estate developers. We know with certainty that these two simultaneous events will cause which of the following? A) no change in the equilibrium quantity and a reduction in the equilibrium price
B) an increase in the equilibrium quantity and in the equilibrium price
C) a decrease in the equilibrium quantity and an indeterminate change in the equilibrium price
D) a decrease in the equilibrium quantity and an increase in the equilibrium price
Ques. 2What is economics and what does it try to explain?
What will be an ideal response?
Ques. 3Which of the following will cause, other things being equal, a movement along the supply curve for LED televisions?
A) an improvement in the technology of producing LED televisions
B) an increase in resource costs for producing LED televisions
C) a reduction in the price of LED televisions
D) an expectation that the price of LED televisions will be lower in the future
Ques. 4Scarcity is
A) a situation of shortage after a hurricane.
B) a permanent human condition relative to the nearly limitless nature of human desires.
C) represented by long lines at stores.
D) the same thing as poverty.
Ques. 5Suppose you are told that the equilibrium price of gasoline has increased, while the equilibrium quantity of gasoline has fallen. You are also told that either the demand changed or supply changed, but not both.
Which of the following must have occurred? A) Demand increased.
B) Demand decreased.
C) Supply increased.
D) Supply decreased.
Ques. 6What is the economic way of thinking, and why is it important?
What will be an ideal response?
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