Question

10. What will happen to the equilibrium price and equilibrium quantity for e-cigarettes if new studies show that e-cigarettes cause lung cancer (all else being equal)?   
                    
          Equilibrium price will increase, and equilibrium quantity will increase
          Equilibrium price will increase, and equilibrium quantity will decrease
          Equilibrium price will decrease, and equilibrium quantity will increase
          Equilibrium price will decrease, and equilibrium quantity will decrease

                

11. What will happen to the equilibrium price and equilibrium quantity for a normal good if consumer income falls (all else being equal)?   
                    
          Equilibrium price will increase, and equilibrium quantity will increase
          Equilibrium price will increase, and equilibrium quantity will decrease
          Equilibrium price will decrease, and equilibrium quantity will increase
          Equilibrium price will decrease, and equilibrium quantity will decrease



12. What will happen to the equilibrium price and equilibrium quantity for cell phones if a new invention reduces the cost of producing cell phones (all else being equal)?   
     
          Equilibrium price will increase, and equilibrium quantity will increase
          Equilibrium price will increase, and equilibrium quantity will decrease
          Equilibrium price will decrease, and equilibrium quantity will increase
          Equilibrium price will decrease, and equilibrium quantity will decrease



13. What will happen to the equilibrium price and equilibrium quantity of a normal good if the price of substitutes for the good increase, and at the same time the cost of inputs used to produce the good also rise?   
     
          Equilibrium price will increase, but the effect on equilibrium quantity can`t be predicted
          Equilibrium price will decrease, but the effect on equilibrium quantity can`t be predicted
          The effect on equilibrium price can`t be predicted, but equilibrium quantity will increase
          The effect on equilibrium price can`t be predicted, but equilibrium quantity will decrease



14. What will happen if the government imposes a price floor above the equilibrium price?   
     
          A shortage will develop (quantity demanded will be greater than quantity supplied
          A surplus will develop (quantity supplied is greater than quantity demanded
          Nothing will happen (quantity demanded will still equal quantity supplied)



15. What will happen to the supply curve is there is an increase in the number of sellers in a market (all else being equal)?   
     
          Supply will shift outward
          Supply will shift inward
          Supply will shift upward
          Supply of the good will not change

Answer 1

Answer 10 - option(d) Equilibrium price will decrease, and equilibrium quantity will decrease. When a particular good is harmfull for health, consumer will automatically decrease consuming that good and will not buy that product at that price. Thus, sellers will reduce the price so that consumer gets attracted to buy that at lower price but at the same time consumer will decrease consuming that product as it is harfull for their health.

Answer 11 - option(d) Equilibrium price will decrease, and equilibrium quantity will decrease. In case of normal goods income effect is positive. Thus, when consumer income decreases the demand curve shifts towards left, and there is a decrease in both equilibrium price and equilibrium quantity.

Answer 12 - option(c) Equilibrium peice will decrease, and equilibrium quantity will increase. As the cost of production of cell phones will decrease the price of cell phones will also fall and the demand for cell phones will increase as the consumers are getting in lower price. Thus, equilibrium price decreases and equilibrium quantity increases.

Answer 13 - option(c) The effect on equilibrium price can`t be predicted, but equilibrium quantity will increase. As we know that if the price of a substitute good increases the demand for the good substitute to that good increases as the customers shift to next best alternative but price may increase or decrease.

Answer 14 - option(b)A surplus will develop (quantity supplied is greater than quantity demanded). Price floor prevents a price to fall below a certain level. When price floor is set above the equilibrium level quantity supplied will exceed quantity demanded which will create excess supply.

Answer 15 - option(a) Supply will shift outward. In an market when there is an increase in seller of a particular good the supply also increases which causes a shift of supply curve outward.