Demand, Supply & Equilibrium 2

Which of the following factors is likely to lead to an increase in the quantity demanded of pens?

• A fall in the price of pen

• A fall in the price of paper

• A rise in the incomes of all consumers

• A fall in the incomes of all consumers

The Law of Supply states that:

• the quantity supplied of a good will always equal the quantity of the good demanded.

• supply creates its own demand.

• at the equilibrium price, there is always some excess supply in the market.

• the quantity supplied of a good rises when the price rises.

Which of the following is likely to cause the demand curve for cars to shift to the left?

• A rise in the price of fuel

• An increase in the cost of production leading to an increase in the price of cars

• An increase in the economy's national income

• A rise in the price of cars

An expected increase in the market price of oil in the coming year is likely to:

• shift the demand curve for oil to the left in the current year.

• shift the supply curve of oil to the left in the current year.

• shift the supply curve of oil to the right in the current year.

• cause no changes in the demand and supply curves of oil in the current year.

Z is a normal good. The equilibrium price and quantity of Z in the year 2011 was $25 and 60 units, respectively. In 2014, the equilibrium price of Z had increased to $35 but the equilibrium quantity had decreased to 50 units. Ceteris paribus, which of the following could explain this change?

• Shift of the supply curve of Z to the right

• Shift of the supply curve of Z to the left

• Shift of the demand curve for Z to the right

• Shift of the demand curve for Z to the left

Z is a normal good. The equilibrium price and quantity of Z in the year 2011 was $25 and 60 units, respectively. In 2014, the equilibrium price of Z had increased to $35 but the equilibrium quantity had increased to 70 units. Ceteris paribus, which of the following could explain this change?

• Shift of the supply curve of Z to the right

• Shift of the supply curve of Z to the left

• Shift of the demand curve for Z to the right

• Shift of the demand curve for Z to the left

The Law of Diminishing Marginal Benefit states that:

• the demand for a commodity is more dependent on income than on price.

• lower levels of consumption give lower level of utility.

• the demand for a commodity declines as its price increases.

• the willingness to pay for an additional unit declines as more of a good is consumed.

In a perfectly competitive market, situations of surplus or shortage of a good:

• are permanent phenomena.

• are self-corrected due to the competitive nature of the market.

• can exist simultaneously.

• exist till the government or any ruling authority intervenes.

Which of the following factors is expected to cause the demand curve for coffee to shift to the right?

• A higher tax on the sale of tea, a substitute for coffee

• A higher personal tax on the income of all consumers

• An increase in the supply of coffee due to better weather

• A fall in the manufacturing cost of coffee

What will be the effect of a minimum price control imposed BELOW the equilibrium market price?

• It will cause excess supply.

• No effect.

•  There will be a surplus

• Depends on the level of the price control