Question

Which of the following statements concerning supply and/or demand is/are true?

Select one:

a. If demand increases and supply simultaneously decreases, equilibrium price will fall.

b. There is no relationship between price and quantity demanded.

c. If demand decreases and supply simultaneously increases, equilibrium price will fall.

d. If demand decreases and supply remains constant, equilibrium price will rise.

Question 14

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If the Federal Reserve wants to increase interest rates, which of the following actions might they take?

Select one:

a. Buy government securities.

b. Sell government securities.

c. Decrease the reserve requirement.

d. Decrease the prime lending rate.

Question 15

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The recent bird flu caused the chicken mortality rate to increase significantly. As a result, what can you expect?

Select one:

a. The price for chickens should decrease as the demand will decrease with the negative publicity.

b. The demand for pork, the other white meat, will likely increase as it is a substitute for chicken.

c. The supply curve for chickens will shift to the right.

d. The demand curve for pork will not move.

Question 16

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The supply of coffee has been drastically reduced due to drought resulting in substantially higher prices. Which of the following statements is/are correct?

1. The demand curve for coffee will shift to the right.

2. The demand curve for creamer will shift to the left.

3. The demand for orange juice will increase.

Select one:

a. 1 only.

b. 2 only.

c. 1 and 2.

d. 2 and 3.

Answer 1

1. Option C is true

a. The first statement is not true as an increase in demand will lead to increase in price while a simultaneous decrease in supply will push the price up to a greater extent as the consumers will pay more to get to fulfil their demand.

b. The statement is not true. As price increases with everything remaining constant, the quantity demanded decreases and vice versa because the consumers won't be able to purchase the same amount with their available income as they used to.

c. This statement is true.A decrease in demand would lead to a rise in stock with suppliers thereby leading to a fall in price, however, an increase in price will further push the prices down because less number of people who are demanding the product will be able to afford it.

d. This statement is not true. With supply remaining constant, a decrease in demand will lead to fall in the prices as the stock with suppliers will rise who'll try to sell goods at a cheaper price.

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