Question

In: Economics

1) Suppose there is an decrease in the price of steel. We would expect the supply...

1) Suppose there is an decrease in the price of steel. We would expect the supply curve for steel beams to

a. shift leftward

b. remain unchanged

c. shift rightward

d. become flatter

2) There is an inverse relationship between the input prices and supply of the output. In one such scenario lead is input to produce crystals. Assume that the price of lead increases, then the supply of crystals would

a. lead to increase

b. crystal to decrease

c. crystal to be unaffected

d. crystal to increase

3) A movement along a fixed demand curve is caused when

a. all non price determinants of demand are held constant

b. only price is held constant

c. all determinants of quantity demanded are held constant

d. income and price are held constant

3) An increase in the supply of a product would cause equilibrium price to

a. and equilibrium quantity to both increase

b. and equilibrium quantity to both decrease

c. to increase and equilibrium quantity to decrease

d. to decrease and equilibrium quantity to increase

Solutions

Expert Solution

1. Ans: remain unchanged

Explanation:

A change in price of a good leads to movement along the supply curve. Any other factor except price leads to shift in the supply curve. Thus, if there is an decrease in the price of steel, supply curve will remain unchanged.

Thus, option [b] is correct answer.

2. Ans: crystal to decrease

Explanation:

Since price of lead and supply of crystal is inversely related, when price of leads increases then the supply of crystals would decrease.

Thus, option [b] is correct answer.

3. Ans: all non price determinants of demand are held constant

Explanation:

A change in price of a good leads to movement along the demand curve. Any other factor except price leads to shift in the demand curve. So, when all non price determinants of demand are held constant, A movement along a fixed demand curve is caused due to change in price.

Thus, option [a] is correct answer.

4. Ans: to decrease and equilibrium quantity to increase

Explanation:

When supply increases, the supply curve will shift rightward. The demand curve remaining unchanged a rightward shift in the supply curve leads to an lower equilibrium price and higher equilibrium quantity.

Thus, option [d] is correct answer.

Rahul Sunny answered 1 year ago
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