Question

1. Which of the following are factors that can shift the supply curve for concert tickets?

1. a wage increase for musicians
2. a cut in personal income taxes
3. a new sound system for concert halls
4. a subsidy for concert providers
5. the price of substitutes for concerts

a. I, II, and V only

b. I, III, and IV only

c. I, III, and V only

d. II, IV, and V only

e. I, III, IV, and V only

2. Given a normal market supply curve for automobiles, if the government required that side airbags be installed on all automobiles, then

a. there is an increase in supply of automobiles.

b. there is an increase in the quantity supplied of automobiles.

c. there is a decrease in supply of automobiles.

d. there is a decrease in the quantity supplied of automobiles.

e. cannot be determined from information given.

3. If the government institutes an effective price floor on volleyballs, then there will be a

a. decrease in demand for and an increase in supply of volleyballs.

b. decrease in supply of volleyballs.

c. decrease in quantity supplied of volleyballs.

d. decrease in demand for volleyballs.

e. decrease in quantity demanded for volleyballs.

4.

Refrigerator Magnets
Price	Quantity Demanded	Quantity Supplied
$10	0	10
$8	3	8
$6	6	6
$4	9	4
$2	12	2
$0	15	0

If the government sets a price ceiling of $4,

a. market forces will cause the quantity demanded to drop and the quantity supplied to rise.

b. a shortage will exist.

c. a surplus will exist.

d. market forces will cause demand to drop and supply to rise.

e. market forces will cause supply to drop and demand to rise.

Answer 1

1. The supply curve for the concert tickets will be affected by the factors such as wages of musicians, new sound system in the concert hall or a subsidy for concert providers would cause a shift in the supply curve.

the correct option is (b)

2. Given the supply curve for automobile, if the government required that side airbags be installed on all automobiles then cost of production of automobiles increase and supply for automobiles shift to the left. Hence there is a decrease in the supply of automobiles.

the correct option is (c)

3. If the government institutes an effective price floor then the price will be above equilibrium price and there is a surplus in the market of volleyballs. Hence there will be a decrease in demand and an increase in the supply of volleyballs.

the correct option is (a)

4. If the market sets a price ceiling of $4 which is price below the equilibrium price then there will be a shortage or excess demand in the market.

the correct option is (b)