Question

1. Cell phones and cell phone cases are complementary goods. Which of the diagrams above accurately shows the impact of a decrease in the price of cell phones on the market for cell phone cases? 

a.A b.B c.C d.D

2. Over the past year, two new companies have entered into the flavored seltzer water market. Which graph illustrates the impact of these new companies entering the competitive flavored seltzer water market? 

a.A b.B c.C d.D

3. Suppose online streaming services and cable TV are substitute goods. All else equal, which graph illustrates the impact of a decrease in the price of online streaming services on the market for cable TV? 

a.A b.B c.C d.D

4. Last week, attacks on Saudi Arabian oil processing facilities severely diminished the country’s ability to deliver oil to markets. Which graph illustrates the impact of the attacks on the market for oil? 

a.A b.B c.C d.D

5. Technological advances in oil production have allowed oil companies to get more oil out of existing oil fields, which graph illustrates the impact of the technological advances on the market for oil? 

a.A b.B c.C d.D

6. Last year the City of Philadelphia imposed a $0.25 per bottle tax on soda sold within the city. Retailers had to pay the city $0.25 for every bottle of soda they sold. Which graph illustrates the impact of the tax on the market for soda in Philadelphia? 

a.A b.B c.C d.D

7. Eli and Dave own a store that sells Dungeons & Dragons books and accessories. Following the popularity of the show Stranger Things, there was an increase in the number of people playing Dungeons & Dragons. Which graph illustrates how this would impact the market for Dungeons and Dragons books and accessories? 

a.A b.B c.C d.D

Answer 1

1.a.A

Reason-In case of complementary goods, fall in price of one good leads to rise in demand for other good also. So demand curve shifts right.

2. c.C

Reason- When new firms enter, more quantity is supplied. Supply increases. Supply curve shifts right.

3. b.B

Reason- In case of substitute goods, fall in price of one good leads to fall in demand for other good also. So demand curve shifts left.

4. d.D

Reason- Due to attacks, supply of oil reduces. Supply curve shifts left.

5. c.C

Reason- Technological advancements leads to rise in supply. Supply curve shifts right.

6. d.D

Reason- Tax on suppliers leads to rise in cost of production. Supply curve shifts left.

7. a.A

Reason- Rise in demand due to rise in preference for the game. Demand curve shifts right.