Question : 3.4   The Effect of Demand and Supply Shifts Equilibrium 1) Let : 1388155

3.4   The Effect of Demand and Supply Shifts on Equilibrium

1) Let D = demand, S = supply, P = equilibrium price, Q = equilibrium quantity.  What happens in the market for solar panels if the government offers tax breaks to encourage manufacturers to produce more solar panels?

A) D increases, S no change, P and Q increase

B) S increases, D no change, P decreases, Q increases

C) D and S increase, P and Q decrease

D) D no change, S increases, P decreases, Q decreases

2) Let D = demand, S = supply, P = equilibrium price, Q = equilibrium quantity.  What happens in the market for sushi if the Surgeon General announces that a majority of the raw fish that is imported to make sushi contains high levels of toxic mercury?

A) D decreases, S no change, P and Q decrease

B) S decreases, D no change, P increases, Q decreases

C) D and S decrease, P and Q decrease

D) D no change, S increases, P decreases, Q decreases

3) Hurricane Katrina damaged a large portion of oil refining and pipeline capacity in the Gulf coast states. In the market for gasoline,

A) the supply curve shifted to the left resulting in an increase in the equilibrium price.

B) the supply curve shifted to the right resulting in an increase in the equilibrium price.

C) the demand curve shifted to the left resulting in a decrease in the equilibrium price.

D) the demand curve shifted to the right resulting in an increase in the equilibrium price.

4) Electric car enthusiasts want to buy more electric cars at a lower price. All of the following events would have this effect except

A) technological advancement in the production of electric car batteries.

B) an increase in the number of manufacturers of electric cars.

C) a decrease in the price of lithium, which is used in the electric car batteries.

D) an increase in the price of gasoline.

5) Electric car manufacturers want to sell more electric cars at a higher price. Which of the following events would have this effect?

A) technological advancement in the production of electric car batteries.

B) an increase in the number of manufacturers of electric cars.

C) a decrease in the price of lithium, which is used in the electric car batteries.

D) an increase in the price of gasoline.

6) Which of the following would cause both the equilibrium price and equilibrium quantity of barley (assume that barley is an inferior good) to increase?

A) an increase in consumer income

B) a drought that sharply reduces barley output

C) a decrease in consumer income

D) unusually good weather that results in a bumper crop of barley

7) Which of the following would cause both the equilibrium price and equilibrium quantity of oysters (assume that oysters are a normal good) to decrease?

A) an increase in consumer income

B) an oil spill that sharply reduces oyster output

C) a decrease in consumer income

D) a technological advancement in the production of oysters

8) Which of the following would cause the equilibrium price of ketchup to increase and the equilibrium quantity of ketchup to decrease?

A) a decrease in the price of tomatoes

B) an increase in the price of tomatoes

C) an increase in the price of mustard, a substitute for ketchup

D) an increase in the price of french fries, a complement for ketchup

9) Which of the following would cause the equilibrium price of apple juice to decrease and the equilibrium quantity of apple juice to increase?

A) a decrease in the price of apples

B) an increase in the price of apples

C) an increase in the price of orange juice, a substitute for apple juice

D) a decrease in the price of granola bars, a complement for apple juice

10) Assume that the hourly price for the services of personal trainers has risen and sales of these services have also risen.  One can conclude that

A) the law of demand has been violated.

B) the number of personal trainers has increased.

C) the demand for personal trainers has increased.

D) personal trainers are deliberately charging high prices because they provide services for wealthy clients.