Question

The Demand and Supply model typically assumes

A- All sellers offer pretty much the same product and both buyers andsellers accept the market price as outside their individual control.

B- None of these.

C- All sellers offer pretty much the same product.

D- Buyers and sellers accept the market price as outside their individual control

Which market is probably the best match for the demand and supply model?

A- The world market for coal.

B- The Eureka labor market for high school graduates

C- New cars

D- Computer operating systems

A movement up and to the left along the demand curve means

A- people want to buy less at every price.

B- people want to buy less because the price went up.

C- people want to buy more at every price.

D- people want to buy more because the price went down.

(A little tricky.) Bikes and gasoline are substitutes. An increase in the price of gasoline causes

A- a leftward movement along the bike demand curve.

B- a rightward movement along the bike demand curve.

C- a leftward shift of the whole bike demand curve.

D- a rightward shift of the whole bike demand curve.

A movement up and to the right along the supply curve means

A- sellers want to sell more because prices went up.

B- sellers want to sell more at every price.

C- suppliers want to sell less because prices went down.

D- sellers want to sell less at every price.

Answer 1

The demand and supply model typically assumes that all sellers offer pretty much the same product and both buyers and sellers accept the market price as outside their individual control. Because assumptions are like identcal goods, buyers and seller are the price takers, goods sell for the same price.

A movement up and to the left along the demand curve means people want to buy less because the price went up. Because demand curve is negatively sloped as there is movement left and to the ualong th demand curve , then it shows the quantity demanded falls because of rise in price.

Bikes and gasoline are substitutes . An increase in the price of gasoline causes a rightward shift of the whole bike demand curve. Because if gasoline and bikes are substitues , and there is an increase in the price of gasoline then, people would buy less of gasoline and more of bikes . So, the demand for bikes increases, and demand curve shift to the right because the increase in demand because of price of substitute .

A movement up and to the right along the supply curve means sellers want to sell more because prices went up. Because supply curve is positively sloped , as there is a movement up and to the right along the supply curve , this will increase the supply because of rise in prices.