Question

1. In the market for natural gas, what will likely happen to current natural gas prices and output if the producers expect future prices to decrease? Current prices will ______________ and current sales will ______________.

a increase; increase

b increase; decrease

c decrease; decrease

d decrease; increase

e not change; not change

2. If the current quantity of output in a market is greater than the equilibrium quantity, what would be the most accurate description of that level of production?

a It is allocatively inefficient because it is above the equilibrium amount of production

b It is allocatively efficient because more is produced than the equilibrium amount of production.

c It is allocatively inefficient because that amount people are willing to pay for the last good produced is less than the cost to produce that good.

d It is allocatively efficient because consumers are getting the good for a very low price.

3. Following an increase in supply and an increase in demand, the market is producing more at a lower price. What must have happened?

a The change in demand was larger than the change in supply.

b The change in demand was smaller than the change in supply.

c There is no reason to think that either change was larger than the other.

d Some other change must have occurred.

4. What will an increase in costs do to a market with an effective price ceiling?

a increase the surplus

b decrease the surplus

c increase the shortage

d decrease the shortage

e It is not clear that any of the above will happen.

5. A price floor is currently effective. If demand decreases, what will happen to the price in the market and the amount produced?

a The price and the amount produced will increase.

b The price and the amount produced will stay the same.

c The price will increase and the amount produced will stay the same.

d The price will stay the same and the amount produced will increase.

6. An increase in income and an increase in the producers’ expectations of falls in future prices will do which of the following in a market for an inferior good?

a we cannot tell about price, but it will increase quantity

b we cannot tell about price, but it will decrease quantity

c we cannot tell about quantity, but it will increase price

d we cannot tell about quantity, but it will decrease price

e we cannot tell about either price or quantity

Answer 1

1.if the producers expect future prices to decrease? Current prices will ________increase______ and current sales will _______decrease_______.

At that time producer have the choice to increase the price for his product as expecting in near future the price is going to decrease. As we know when the price decrease the level of sale also increase producers don't Face any problem in sales.

2 If the current quantity of output in a market is greater than the equilibrium quantity

C.It is inefficient because that amount people are willing to pay for the last good produced is less than the cost to produce that good.

3. d. Some other change must have occurred.

4. an increase in costs do to a market with an effective price ceiling

A. increase the surplus

5. D. The price and the amount produced will stay the same.

6.

A.we cannot tell about price, but it will increase quantity

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