Mid-mid Term Check

The demand for a product is inversely related to its price, ceteris paribus.

What does ceteris paribus mean in this context?

• Factors affecting demand other than price are held constant

• Factors affecting price other than demand are held constant

• Price falls result in increased quantity demanded

• Price changes result from changes in demand

What is likely to be introduced in the market for bus travel if an economy moves from a mixed economy to a market economy?

• maximum prices for bus travel

• free bus travel for school children

• allowing companies to bid for bus routes

• subsidies to bus operators

The diagram shows a shift in a firm’s supply curve from S1 to S2.

What may have caused the shift from S1 to S2?

• a decrease in the popularity of the firm’s product

• a decrease in the tax on the good

• a decrease in the costs of production of the firm

• a decrease in the subsidy on the good

What is not an example of the role of the factor enterprise in a modern economy?

• reducing costs through the introduction of a new shift system for employees

• deciding on new export markets for the firm’s goods and services

• transforming the production process with the introduction of technological improvements

• making payments to suppliers for raw materials and capital goods

The diagram shows the market for oil. The original equilibrium price is P.

There is a reduction in world oil supplies due to war in some supplying countries. At the same time some importing countries are much colder than usual.

What will be the equilibrium price of oil after these changes?

• P1

• P2

• P3

• P4

The demand for a good falls at the same time as its costs of production decrease.

What will be the combined effect of these changes on the price and on the quantity supplied of the good?

• Price decrease, Quantity decrease

• Price decrease, Quantity uncertain

• Price uncertain, Quantity decrease

• Price uncertain, Quantity uncertain

A government fixes a minimum price for a service.

What will be the outcome of such a policy?

• Demand will fall if the minimum price is below the equilibrium price

• Demand will rise if the minimum price is above the equilibrium price

• Production will fall if the minimum price is above the equilibrium price

• Production will stay the same if the minimum price is below the equilibrium price

The diagram shows the demand curve, D1, and the supply curve, S1, for a good.

The government decides to pay producers a specific subsidy for each unit supplied to the market. Which curve shows the new effective demand or supply curve?

• S1

• S2

• S3

• S4