Unit 3

There is a new and improved piece of production equipment brought into the Tesla factory. What is the result on the market?

• supply curve shifts to the right

• supply curve shifts to the left

• demand curve shifts to the right

• demand curve shifts to the left

A new study shows that eating chocolate chip cookies can prevent a heart attack. What will most likely happen to the market for chocolate chip cookies?

• both the equilibrium price and equilibrium quantity will increase

• both the equilibrium price and equilibrium quantity will decrease

• the equilibrium price will increase but the equilibrium price will decrease

• the equilibrium price will decrease but the equilibrium price will increase

Which scenario would cause an increase in demand for swim suits?

• the weather man announces it will be a hotter summer than last year

• a new company joins the swim suit market

• the price of swim suits have decreased

• a company sends its swim suit production overseas for a lower cost

A rightward shift of a market supply curve might be caused by what?

• entry of new firms in the industry

• increase in the costs of production

• a decrease in the income of consumers

• none of the above

The Law of Supply states that as the price of bananas increases,

• the supply for bananas decreases

• the supply for bananas increases

• the quantity supplied for bananas decreases

• the quantity supplied for bananas increases

If the cereal market experiences a rightward shift in demand, which of the following would be true?

• milk, a complement to cereal, would see an increase in price

• milk is a normal good so there has been an increase in the income of those who buy cereal

• consumers expect cereal prices to go down next month

• report states that eating cereal leads to lower quality of life and long term sadness

Suppose consumers expect the price of gasoline to decrease tomorrow. If the market for gasoline today, what is likely to happen in the market for gasoline TODAY?

• demand will shift to the left

• supply will shift to the right

• demand will shift to the right

• nothing happens

After a massive hurricane this year, the number of orange producers decreased dramatically. The price of tangerines, a substitute to oranges, decreased. Based on these events, what can we say about the equilibrium price and quantities in the orange market?

• equilibrium price is ambiguous but equilibrium quantity decreased

• equilibrium price is ambiguous but equilibrium quantity increased

• equilibrium price decreased but equilibrium quantity is ambigious

• equilibrium price increased but equilibrium quantity is ambigious

Assume the market for pizza is currently in equilibrium. The government places a price ceiling on pizza below the market price. What will happen next?

• Quantity demanded will increase and Quantity supplied will decrease, resulting in a shortage

• Quantity demanded will decrease and Quantity supplied will increase, resulting in a surplus

• Quantity demanded and quantity supplied will increase, and the market will remain in equilibrium

• No change to quantity demand or supply, market remains in equilibrium

The supply line always has a _____ slope.

• positive

• negative

• zero

• vertical