WHALES AS: Demand & Supply

Assume that rice is a substitute for potatoes. If there is a decrease in the supply of potatoes, what is likely to happen to the market for rice in the short run?

A Demand will decrease and the price will decrease.

B Demand will increase and the price will increase.

C Supply will decrease and the price will increase.

D Supply will increase and the price will decrease.

• A

• B

• C

• D

In the diagram, point X shows the equilibrium price and quantity for a fruit drink. The government announces that the ingredients used in the drink can be harmful. Which point, A, B, C or D, is most likely to represent the new equilibrium after consumers hear this announcement?

• A

• B

• C

• D

The table shows observations of a competitive market in equilibrium in two periods. What could explain the change from period 1 to period 2?

A an increase in the price of a complement

B an increase in the price of a substitute

C the imposition of an indirect tax on suppliers

D the imposition of a minimum price of 60 cents by a government

• A

• B

• C

• D

In the last ten years e-mail has increasingly been used in preference to postal services. Which graph shows the changes in the market for postal services?

• A

• B

• C

• D

During a certain period, 10 000 units of a normal good are sold at a price of 20c. During a later period, 12 000 units are sold at a price of 22c. What could explain this change?

A a reduction in consumers' incomes

B an increase in the cost of raw materials

C an increase in the price of a substitute commodity

D an increase in the productivity of factors of production

• A

• B

• C

• D

Which piece of information would enable you to construct the market demand curve for a product?

A the equilibrium price of the product

B the number of consumers who would purchase the product at each price

C the number of firms in the industry

D the quantity that each consumer would be willing and able to buy at each price

• A

• B

• C

• D

What is most likely to increase the demand for compact disc players?

A a fall in disposable incomes

B a fall in the price of cinema tickets

C a fall in the price of compact discs

D a fall in the price of video recorders

• A

• B

• C

• D

The diagram shows the market for computer games. The market starts in equilibrium at X. What will be the new equilibrium if the tax on computer games is increased and incomes fall?

• A

• B

• C

• D

The diagram shows the demand curve for good X. What could cause a movement along the curve from M to N?

A a change in consumer tastes in favour of X

B a decrease in labour costs of producing X

C a decrease in the demand for X

D an increase in the price of a substitute good

• A

• B

• C

• D

A firm publishes and sells books. The diagram shows a shift in the firm’s supply curve from S1 to S2. What would have caused this shift in the firm’s supply curve?

A a fall in the subsidies paid to book publishers

B a fall in the price of paper

C a rise in the real income of customers

D a rise in the wages of the firm’s workers

• A

• B

• C

• D