Question

(16)Which of the following statements is true?

If there is a simultaneous decrease in the demand and supply in the market for cooking gas:

(a)The price for cooking gas decreases and the quantity decreases

(b)The price of cooking gas is undetermined and the quantity decreases

(c)The price of cooking gas decreases and the quantity is undetermined

(d)The price for cooking gas increases and the quantity decreases

(17)Given ceteris paribus, if consumer tastes change so that people are eating less carrots, then what will happen to the market equilibrium for beetroot, a substitute good for carrots?

(a)Price will increase and quantity will increase

(b)Price will increase and quantity will decrease

(c)Price will decrease and quantity will increase

(d)None of the above

(18)Which of the following statements is true?

If the federal government subsidies a national day care service for firms that supply this service given ceteris paribus:

(a)The supply curve for day care service will shift to the right

(b)The demand curve for day care service will shift to the right

(c)The demand curve for day care service will shift to the left

(d)Any of the above

(19)Which of the following statements given ceteris paribus is true?

A recent report suggests that frequent cellular phone usage may be linked to brain cancer, given this report it is prudent to expect:

(a)The demand for cellular phones to shift to the right

(b)The demand for cellular phones to remain unchanged

(c)(a) and (b) above

(d)None of the above

(20)The most plausible reason to explain why changes in the price of cotton can cause shifts in the supply curve for tobacco is:

(a)Cigarette smokers often wear cotton pants

(b)An increase in incomes cause consumers to buy more cotton and tobacco

(c)Firms can switch from growing tobacco to cotton and vice versa

(d)Cotton and tobacco are unrelated markets in all ways

                                  

(21)A change in supply given ceteris paribus cannot be caused by a change in:

(a)Factor input prices

(b)Technology     

(c)Price of a good

(d)Natural disasters

                

(22)Which of the following statements best represents the change in Sydney’s demand curve for the book “Calculus Made Easy” due to a decrease in the price for the book given ceteris paribus?

(a)His original demand curve would shift to the left

(b)His original demand curve would shift to the right

(c)His original demand curve would remain unchanged

(d)None of the above

(23)Which of the following given ceteris paribus would shift the demand curve for 35 mm film to the right?

(a)A fall in the price of 35 mm cameras

(b)A fall in the price of 35 mm film

(c)A fall in consumers' incomes

Answer 1

16. (b)The price of cooking gas is undetermined and the quantity decreases
Decrease in both supply and demand decreases quantity and price may increase, decrease, or remain same depending on the extent of the shift of the demand and supply curves.

17. (a)Price will increase and quantity will increase
Demand for beetroot will increase which will increase both price and quantity.

18. (a)The supply curve for day care service will shift to the right
Due to subsidy, supply curve shifts to the right.

19. (d)None of the above
Demand will decrease and shift to the left.

20. (c)Firms can switch from growing tobacco to cotton and vice versa
As both tobacco and cotton are grown so a change in the price of cotton can cause a change in the supply of tobacco.

21. (c)Price of a good
This does not cause a change in the supply

22. (c)His original demand curve would remain unchanged
A change in price cause a movement along the demand curve.

23. (a)A fall in the price of 35 mm cameras
Cameras and film are complements so as price of cameras decrease, demand for cameras will increase and this will also increase the demand for film and demand curve will shift to the right.