Question

(63)Suppose consumers consider Mountain Drew and Pepsi Cola sodas to be substitutes. What will happen in the Mountain Drew market if given ceteris paribus there is an increase in the price of Pepsi Cola?

(a)The demand for Pepsi Cola will decrease

(b)The demand for Mountain Drew will decrease

(c)The demand curve for Pepsi Cola will shift to the left

(d)The demand curve for Mountain Drew will shift to the right

(64)Which of the following statements is true?

Mudinga has a vertically sloped demand curve for movie tickets, therefore:

(a)Mudinga’s demand curve conforms to the law of demand

(b)Mudinga’s demand curve has a slope that is equal to zero

(c)More information needed

(d)None of the above

(65)Which of the following statements is true?

A demand schedule differs from a demand curve because:

(a)The former is negatively sloped and the latter is horizontally sloped

(b)The former represents the relationship between price and quantity supplied and the latter is a table

(c)The former is a rhombus and the latter is vertically sloped

(d)None of the above

(66)Which of the following given ceteris paribus can bring about a change in the quantity demanded of a service?

(a)Change in supply

(b)Change in taste

(c)Change in price expectations

(d)None of the above

(67)At a price of $8 per tube, Felix buys 12 tubes of Colgate toothpaste; when the price increases to $11 per tube, Felix buys 9 tubes of Colgate toothpaste. Vernie says Felix’s demand for Colgate toothpaste has decreased. Is Vernie correct?

(a)Yes, Vernie is correct. Felix’s demand has decreased.

(b)No, Vernie is incorrect. Felix’s demand has increased.

(c)No, Vernie is incorrect. Felix’s quantity demanded has decreased and his demand has not changed

(d)No, Vernie is incorrect. Felix’s demand has increased, and his quantity demanded has decreased

(69)Which of the following represents Andras’ demand for apricots at a market price of $6 per pound in Figure#1 above?

(a)1 pounds

(b)Andras is not in the market for apricots

(c)6 pounds

(d)More information needed

(70)If Congress adopts a policy to reduce the tax per bottle for red wines paid by the retailers of these wines, other things being equal, the price of red wines will fall. This fall in price can be attributed to a (an):

(a)Upward movement along the supply curve for red wines

(b)Rightward shift of the supply curve for red wines

(c)Rightward shift of the demand curve for red wines

(d)None of the above

(71)Which of the following statements is true?

Suppose now consumer demand for blackberries increases and the farmers’ supply of blackberries decreases:

(a)The price and quantity of blackberries will be ambiguous

(b)The price of blackberries will be ambiguous and the quantity of blackberries will decrease

(c)The price of blackberries will increase unambiguously and the quantity of blackberries will be ambiguous

(d)None of the above

(72)Which of the following statements is true?

If more students apply to engineering schools, given ceteris paribus, we can expect:

(a)The demand for engineers to increase

(b)The demand for engineers to decrease

(c)The supply of engineers to increase

(d)There is no effect on the supply or demand for engineers

(73)An increase in both supply and demand for organically grown blueberry tea causes which of the following?

(a)The equilibrium price of blueberry tea to fall

(b)The equilibrium price of blueberry tea to rise

(c)The equilibrium quantity of blueberry tea decreases

(d)None of the above

Answer 1

Question 63):-

Substitutes are products which consumers purchase as a replacement for one another. Their demands are linked in such a fashion that the price rise of one commodity makes consumers give up on it in favor of the other alternative available in the market. Therefore, it is fair to say that the price rise in commodity X will lead to higher quantity demanded for commodity Y if both are substitutes of one another because they are alternatives to one another.

In the case above, Mountain Dew and Pepsi Cola are said to be substitutes to one another. In this case, an increase in the price of Pepsi Cola would lead to decline in its demand in favor of Mountain Dew. Therefore in this case let us consider the options and evaluate the same.

Option (A) The demand for Pepsi Cola will decrease.

Since the price for Pepsi Cola will increase, indeed the quantity demanded will reduce. Therefore the option is true

(B)The demand for Mountain Drew will decrease

Since Mountain Dew is a substitute for Pepsi its demand will increase rather decrease. Therefore this option is false

(C) The demand curve for Pepsi Cola will shift to the left

A shift in the demand curve happens for reasons other than the price of the product itself. I.e when the price of the product remains the same, and the demand changes a shift is said to occur.

In this case, the demand changes because of change in price of the product than any other reason. Therefore this option is false

(D)The demand curve for Mountain Drew will shift to the right

Indeed, as the demand for Mountain Dew Rises irrespective to the fact that the price remains the same, a shift in the demand curve is said to have taken place. Therefore, this option is True.

Question 64)

In case of vertically sloped demand curves, the demand pattern indicates, that no matter what the price of the commodity the demand remains constant. It refers to a pattern, in which its elasticity is 0 meaning that no matter what be the price of the commodity, the demand for it will not change, however, the slope is infinite indicating the same.

Slope is generally defined as the change in price of a commodity as reflected by the change in quantity demanded. Since this does not change, the slope is said to be infinite.

In this case, none of the options confer to the above stated statement therefore the best option in this case, is option (D) None of the Above

Question 65)

A demand schedule represents the quantity demanded for a product at different price levels, whereas a demand curve is a graphical representation of the demand schedule.

Therefore, since the demand curve only depicts what a demand schedule says, they are parts of the same coin with no differences at all. The demand schedule is a written depiction whereas a demand curve is a graphical representation.

An example of demand schedule and demand curve is as follows:-

Demand Schedule:-

Price	Quantity Demanded
10$	300
20$	200
30$	100

Therefore, since a demand schedule is a table and a demand curve is a graph, none of the options are correct and Option D None of the Above is the right option

Question 66)

ceteris paribus is an assumption that demand will remain constant and directly related to price as long as items such as tastes and preferences of the consumers, supply and expectations of future prices remains constant,

A change in the tastes and preferences of the consumers can directly impact the demand for a service and so can the supply of the services and the expectation that future prices may see an increase.

Therefore, Option A, B & C are correct ones.