Question

5. Improvements in technology that reduce production costs cause the _____ curve to shift to the _____, indicating a(n) _____ in the amount _____ at each price point.

A.

demand; right; increase; demanded

B.

supply; left; decrease; supplied

C.

demand; left; decrease; demanded

D.

supply; right; increase; supplied

6. Assume a farmer’s land is equally productive in growing corn or potatoes and is currently producing both. If the price of corn increases but the price of potatoes does not change, the farm’s supply curve for potatoes will:

A.

shift to the right, and more potatoes will be produced at each price level.

B.

not change, because the production of potatoes is not affected by price changes for corn.

C.

shift to the left, and fewer potatoes will be produced at each price level.

D.

shift to the right, and fewer potatoes will be produced at each price level.

7. An increase in government subsidies for an industry, which reduces production cost, causes the market equilibrium price to _____ and the market equilibrium quantity to _____.

A.

decrease; increase

B.

increase; decrease

C.

increase; increase

D.

decrease; decrease

True/False Questions

After watching the Markets video lecture, consider the question(s) below. Then “submit” your response.

1. An increase in consumer preference for a good shifts the demand curve to the left.

A.

True

B.

False

2. As income increases, the demand curve for an inferior good shifts to the left.

A.

True

B.

False

3. If the price of a resource required to produce a good increases, the supply curve will shift to the right, indicating that producers are inclined to produce more of the good at each price point.

A.

True

B.

False

Answer 1

5. A technological improvement that reduces cost of production will shift supply curve to the right indicating an increase in the amount supplied at each price point. Therefore the answer is option D.

6.I the price of corn increases then the farmer will produce more corn and less potatoes. As a result supply curve will shift to the left indicating less of potatoes supplied in each price level. Therefore the answer is option C.

7. A government subsidy affects a market by reducing the price paid by the buyer and increasing the quantity sold. Therefore the answer is option a.

1. An increase in consumer preference for a good shifts the demand curve to the right. Therefore the answer is option B. False

2. The demand curve for an inferior good shifts to the right when income decreases and shift to the left when income increases. Therefore the answer is option A. True.

3. If the price of a resource required to produce a good increases, the supply curve will shift to the left, indicating that producers are inclined to produce less of the good at each price point. therefore the answer is option B. False