Demand, Supply & Equilibrium

In which of the following situations will the demand curve for a good shift to the right?

• An increase in the production subsidy paid on the good

• A reduction in the production tax imposed by the government on the good

• An increase in the supply of a substitute good

• An increase in the supply of a complementary good

Normal goods are:

• goods whose demand falls as people's incomes rise.

• pairs of goods which are considered by consumers to be alternatives to each other.

• goods whose demand rises as people's incomes rise.

• pairs of goods consumed together.

Which of the following is not a determinant of demand?

• The price of substitute goods

• Income

• Tastes

• Profitability of other products

A change in the price of a product will cause:

• a shift in the supply curve

• a shift in the demand curve

• no change

• a movement along the demand curve

A market clears when:

• supply matches demand

• supply exceeds demand

• demand exceeds supply

• None of the available options here

You observe that the price of cereal falls but that the quantity sold rises. From this you can deduce that:

• the supply curve has shifted to the left, but we cannot deduce whether or not the demand curve has shifted.

• the supply curve has shifted to the right, but we cannot deduce whether or not the demand curve has shifted

• the demand curve has shifted to the right, but we cannot deduce whether or not the supply curve has shifted.

• the demand curve has shifted to the left, but we cannot deduce whether or not the supply curve has shifted.

The National Minimum Wage is an example of:

• equilibrium in the free market economy.

• a maximum price control

• a minimum price control

• the price mechanism

The government imposes a maximum rent on flats that is BELOW the equilibrium rent.  You accurately predict that:

• landlords are less likely to do routine maintenance work in the flats.

• the new law will create a surplus of flats to rent.

• the new law will have no economic impact.

• renters will find that landlords start offering to furnish the flats.

Which of the following pairs of goods are likely to be considered substitutes?

• A Ford car and public transportation

• A Nokia cell phone and a Nokia cell phone charger

• Coffee and sugar

• Printers and printing ink

Which of the following pairs of goods are likely to be considered complements?

• Nokia and Samsung cell phones

• Laptops and electric heaters

• Motorcycles and typewriters

• Pens and writing pads