Question : Figure 3-8 21) Refer to Figure 3-8.  The graph in this : 1267044

Figure 3-8

21) Refer to Figure 3-8.  The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D1 and S1 (point A).  If the price of oranges, a substitute for apples, decreases and the wages of apple workers increase, how will the equilibrium point change?

A) The equilibrium point will move from A to E.

B) The equilibrium point will move from A to B.

C) The equilibrium point will move from A to C.

D) The equilibrium will first move from A to B, then return to A.

22) Refer to Figure 3-8.  The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D1 and S1 (point A). If there is a shortage of apples how will the equilibrium point change?

A) The equilibrium point will move from A to B.

B) The equilibrium point will move from A to C.

C) There will be no change in the equilibrium point.

D) The equilibrium point will move from A to E.

23) Refer to Figure 3-8.  The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D2 and S2 (point E).  Which of the following changes would cause the equilibrium to change to point A?

A) A positive change in the technology used to produce apples and decrease in the price of oranges, a substitute for apples.

B) An increase in the wages of apple workers and a decrease in the price of oranges, a substitute for apples.

C) An increase in the number of apple producers and a decrease in the number of apple trees as a result of disease.

D) A decrease in the wages of apple workers and an increase in the price of oranges, a substitute for apples.

24) Refer to Figure 3-8.  The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D1 and S1 (point A).  If there is an increase in the wages of apple workers and an increase in the price of oranges, a substitute for apples, the equilibrium could move to which point?

A) none of the points shown

B) B

C) C

D) E

25) Which of the following statements is true?

A) An increase in demand causes a change in equilibrium price; the change in price does not cause a further change in demand or supply.

B) A decrease in supply causes equilibrium price to rise; the increase in price then results in a decrease in demand.

C) If both demand and supply increase there must be an increase in equilibrium price; equilibrium quantity may either increase or decrease.

D) If demand decreases and supply increases one cannot determine if equilibrium price will increase or decrease without knowing which change is greater.

26) A decrease in the equilibrium price for a product will result

A) when the quantity demanded for the product exceeds the quantity supplied.

B) when there is a decrease in supply and a decrease in demand for the product.

C) when there is an increase in supply and a decrease in demand for the product.

D) when there is a decrease in demand and a decrease in the number of firms producing the product.

27) The following appeared in a Florida newspaper a week after a hurricane hit the state.  “Floridians are relieved that the storm produced no fatalities but homeowners face weeks, if not months, of rebuilding.  Matters are made worse by the soaring prices of plywood and other building materials that always follow in a hurricane’s path.  Complaints of profiteering and price gouging have not deterred firms from raising their prices by over 100 percent.”  Which of the following offers the best explanation for the price increases referred to in the article?

A) The hurricane reduced the number of suppliers of building materials.

B) The hurricane created an artificial shortage of building materials.

C) The hurricane caused an increase in the demand for building materials.

D) There was a reduction in supply as firms shipped plywood and other materials to locations not affected by the storm.

28) Which of the following would cause a decrease in the equilibrium price and an increase in the equilibrium quantity of salmon?

A) a decrease in demand and an increase in supply

B) an increase in supply

C) an increase in supply and an increase in demand greater than the increase in supply

D) a decrease in demand and a decrease in supply

29) Select the phrase that correctly completes the following statement.  “A positive change in technology caused an increase in the supply of flat-screen televisions.  As a result ________.”

A) the price of flat-screen televisions decreased and the demand for flat-screen televisions increased

B) the equilibrium quantity of flat-screen televisions decreased

C) the price of flat-screen televisions decreased and the quantity demanded of flat-screen televisions increased

D) the price of flat-screen televisions decreased.  The lower price caused the supply of flat-screen televisions to decrease

30) What would happen in the market for laser eye surgery if insurance companies started to cover a portion of the price of voluntary procedures?

A) Demand will increase, but this will not shift the supply curve.

B) Supply will increase, but this will not shift the demand curve.

C) Demand and supply will both increase.

D) Demand will increase and supply will decrease.