Question

In: Economics

Which of the following would be a determinant of supply? (x) the price of the good...

Which of the following would be a determinant of supply?
(x) the price of the good
(y) number of sellers in the market
(z) seller’s expectations about demand
A. (x), (y) and (z)
B. (x) and (y), only
C. (x) and (z), only
D. (y) and (z), only
E. (z) only

Suppose an earthquake in Italy destroys a number of buildings that were used to produce shoes. Which of the following would an economist expect to occur as a direct result of this event?
(x) Sellers would not be willing to produce and sell as much as before at each relevant price.
(y) Buyers would not be willing to buy as many Italian shoes as before at each relevant price
(z) The supply curve for Italian shoes would shift to the left, the equilibrium price of Italian shoes would rise and the equilibrium quantity would fall.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (x) only

Which of the following statements is (are) correct?
(x) If the number of sellers in a market increases, then the demand curve for the good shifts to the right.
(y) If the federal government places regulations on the production and sale of a good, it is probable that the
costs of production will increase and the supply curve for the good will shift to the left.
(z) If suppliers expect the price of their product to fall in the future, then they will increase supply today before the
price decrease occurs.

A. (x), (y) and (z) B. (x) and (y) only
C. (x) and (z) only D. (y) and (z) only
E. (y) only

Solutions

Expert Solution

(1) (D)

The higher (lower) the number of sellers, the higher (lower) the supply. If sellers expect future demand to rise (fall), they decrease (increase) current supply. But a good's own price impacts its quantity supplied, not its supply.

(2) (C)

Destruction of production facility will decrease the supply, and supply curve will shift left, increasing price and decreasing quantity.

(3) (D)

Statements (y) and (z) are true. But higher number of sellers will increase market supply, not demand.


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