Question

Question 1 tests your understanding of demand curves.

1. Which statement below is FALSE?

Group of answer choices

A         A demand curve slopes downward from left to right.

B         As price falls, quantity demanded increases.

C         The market demand curve is found by adding vertically the individual demand curves.

Question 2 tests your understanding of supply curves.

2. Which statement below is FALSE?

Group of answer choices

A         A supply curve slopes downward from left to right.

B         As price rises, quantity supplied increases.

C         The market supply curve is found by adding horizontally the individual supply curves.

Question 3 tests your understanding of the concept of consumer surplus.

3. If the supply curve were to shift to the left and cause the price to rise, the rise in price would

Group of answer choices

A         increase the total consumer surplus received by buyers of the good

B          not change the total consumer surplus received by buyers of the good

C          reduce the total consumer surplus received by buyers of the good

Question 4 tests your understanding of the concept of producer surplus.

4. If the demand curve were to shift to the left and cause the price to fall, the fall in price would

Group of answer choices

A         increase the total producer surplus received by sellers of the good

B          not change the total producer surplus received by sellers of the good

C          reduce the total producer surplus received by sellers of the good

Questions 5-8 test your understanding of how changes in expectations about future prices can impact the market for the good today.

5. If buyers come to expect the price to rise in the next period and sellers come to expect the price to fall in the next period, what would certainly occur in the current period?

Group of answer choices

A         The quantity traded would fall.

B          The quantity traded would rise.

6. If buyers come to expect the price to fall in the next period and sellers come to expect the price to rise in the next period, what would certainly occur in the current period?

Group of answer choices

A         The quantity traded would fall.

B          The quantity traded would rise.

7. If both buyers and sellers come to expect the price to rise in the next period, what would certainly occur in the current period?

Group of answer choices

A         The price would fall.

B          The price would rise.

8. If both buyers and sellers come to expect the price to fall in the next period, what would certainly occur in the current period?

Group of answer choices

A         The price would fall.

B          The price would rise.

Answer 1

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1) Option C is false because The market demand curve is found by adding horizontally the individual demand curves.

2) Option A is false because the supply curve shows the relationship between price and quantity. So a supply curve slopes upward from left to right.

3) Option C is correct, If the supply curve were to shift to the left and cause the price to rise, the rise in price would reduce the total consumer surplus received by buyers of the good.

4) Option C is correct, If the demand curve were to shift to the left and cause the price to fall, the fall in price would reduce the total producer surplus received by sellers of the good.

5) Option B is correct, If buyers come to expect the price to rise in the next period and sellers come to expect the price to fall in the next period, buyers will increase the demand, and the seller will increase the supply in the current period then The quantity traded would rise.

6) Option A is correct, If buyers come to expect the price to fall in the next period and sellers come to expect the price to rise in the next period, buyers will decrease the demand, and the seller will decrease the supply in the current period then The quantity traded would fall.

7) Option B is correct, If both buyers and sellers come to expect the price to rise in the next period, buyers will increase the demand, and the seller will decrease the supply in the current period then The price would rise.

8) Option A is correct, If both buyers and sellers come to expect the price to fall in the next period, buyers will decrease the demand, and the seller will increase the supply in the current period then The price would fall.