Question

1: The quantity of product X supplied can be expected to rise with a fall in

	a.	prices of competing products
	b.	price of X
	c.	energy-saving technical change
	d.	input prices

2: A demand curve expresses the relation between the quantity demanded and

	a.	income
	b.	advertising
	c.	price
	d.	all of the above

3: Change in the quantity demanded is

	a.	a movement along a single demand curve
	b.	an upward shift from one demand curve to another
	c.	a reflection of change in one or more of the nonprice variables in the product demand function
	d.	a downward shift from one demand curve to another

4: A supply curve expresses the relation between the quantity supplied and

	a.	technology
	b.	wage rates
	c.	price
	d.	all of the above

5:Change in the quantity supplied reflects a

	a.	change in price
	b.	switch from one supply curve to another
	c.	change in one or more nonprice variables
	d.	shift in supply

6: Holding all else equal, an unnecessary increase in federally-mandated auto safety requirements leads to a decrease in

	a.	auto demand
	b.	the quantity of autos supplied
	c.	auto supply
	d.	the quantity of autos demanded

7:Farmers in certain areas of the U.S. can grow either wheat or corn. If the price of corn increases the

	a.	supply of wheat will shift to the right
	b.	supply of wheat will shift to the left
	c.	supply of both corn and wheat will shift, but in opposite directions
	d.	supply of corn will shift to the right

Answer 1

1.Option (d) is correct
Explanation : With a fall in price of input, production of product X will increase and increased production will result into increase in supply of product X. So the quantity of product X supplied can be expected to rise with a fall in input prices.

2.Option (c) is correct.
Explanation: According to law of demand demanded quantity will increase with a fall in price and falls with a rise in price.When demand curve is drawn it expresses the inverse relationship between the quantity and price of the product.

3.Option (a) is correct.
Explanation : As a demand curve shows an inverse relationship between quantity and price demanded, a change in quantity demanded is resulted by a change in price and it is a movement along a single demand curve.

4.Option (c) is correct.
Explanation : According to law of supply when price increases, quantity supplied also increases and price decreases, quantity supplied will decrease.When we draw a supply curve it indicates a direct relationship between quantity supplied and price.

5.Option (a) is correct.

Explanation: As a price of the product is major determinant of its supply. It increase with rise in price and falls with fall in price. So change in quantity supplied reflects a change in price.

6. Option (c) is correct.
Explanation : When there is an unnecessary increase in federally mandated auto safety requirements, production of auto will decrease and it leads to decrease in auto supply.

7.Option (d) is correct.
Explanation : As the price of corn increases, farmers of US in certain areas prefer more production of corn rather than wheat in order to earn maximum profit.As production of corn increases, supply of corn will also increase and shift the supply of corn to the right.