Question 1

Figure 4-2
 
-Refer to the Figure 4-2.What would happen at a price of $35

Accepted Answer

D

Question 2

When evaluating differences or similarities between an increase in supply and an increase in quantity supplied,what do we know

Accepted Answer

An increase in supply represents a shift of the supply curve, while an increase in quantity supplied is movement along the supply curve. An increase in supply means that more of a product is available at every price level, while an increase in quantity supplied means that more of a product is available at a specific price level. This is an important distinction to make when analyzing changes in the market.

Question 3

What is the price where quantity supplied equals quantity demanded

Accepted Answer

The price where quantity supplied equals quantity demanded is known as the equilibrium price. It is the point at which the market is in balance and there is no excess supply or demand. Therefore, the best choice would be option C, the equilibrium price.

Question 4

What is the unique point at which the supply and demand curves intersect

Accepted Answer

The unique point at which the supply and demand curves intersect is called equilibrium, where the quantity demanded is equal to the quantity supplied, and there is no excess supply or demand.

Question 5

Figure 4-1
 
-Refer to the Figure 4-1.What is the movement from S₁ to S called

Accepted Answer

The answer of Figure 4-1
 
-Refer to the Figure 4-1.What...

Question 6

Figure 4-2
 
-Refer to the Figure 4-2.What are the equilibrium price and quantity

Accepted Answer

The equilibrium price and quantity occur at the intersection of the supply and demand curves. In Figure 4-2, this occurs at a price of $25 and a quantity of 400. Choice C corresponds to these values, making it the correct answer.

Question 7

If a car manufacturer purchases new labour-saving technology for its assembly line,what would we NOT expect

Accepted Answer

The purchase of new labour-saving technology is generally expected to reduce labour costs for the firm, which would allow it to reduce the price of cars or at least maintain the same price while improving profit margins. Therefore, it would not be expected for the price of cars to increase as a result of this investment.

Question 8

Figure 4-2
 
-Refer to the Figure 4-2.What would happen at a price of $15

Accepted Answer

At a price of $15, the quantity demanded is 600 units, while the quantity supplied is only 200 units. This creates a shortage of 400 units.

Question 9

What happens if there is a shortage of a good at the current price

Accepted Answer

If there is a shortage of a good at the current price, it means that there is excess demand for the good. This indicates that the price is below the equilibrium price, leading to a shortage. To eliminate the shortage, the price needs to increase to reach the equilibrium point where quantity demanded equals quantity supplied.

Question 10

Recent pine beetle infestations that are destroying trees in the western provinces are expected to cause the price of lumber to rise in the next six months.As a result,what can we expect to happen to the supply of lumber

Accepted Answer

The question states that recent pine beetle infestations are causing trees to be destroyed, which will lead to a rise in lumber prices in the next six months. This suggests that the supply of lumber will fall now due to the infestations, as there will be fewer trees available to harvest.

Question 11

Figure 4-1
 
-Refer to the Figure 4-1.What is the movement from S to S₁ called

Accepted Answer

The answer of Figure 4-1
 
-Refer to the Figure 4-1.What...

Question 12

Wheat is the main input in the production of flour.All else equal,if the price of wheat increases,what would we expect

Accepted Answer

If the price of wheat increases, it will increase the cost of producing flour. Consequently, this will lead to a decrease in production and an increase in the price of flour, resulting in a decrease in the supply of flour. Therefore, we would expect the supply of flour to decrease.

Question 13

What is another term for equilibrium price

Accepted Answer

The term "market-clearing price" is the most commonly used synonym for equilibrium price. "Balancing price" is not a commonly used term, "cooperative price" implies some form of negotiation or cooperation which may not necessarily be present in the determination of equilibrium price, and "reservation price" refers to the highest price a consumer is willing to pay for a good or service.

Question 14

Funsters Inc.sells its most popular doll for $35.It has just learned that its leading competitor is mass producing an excellent copy and plans to flood the market with their $10 doll in six weeks.What should Funsters do

Accepted Answer

Increasing the supply now allows Funsters Inc. to capitalize on current demand before the competitor's cheaper doll enters the market, potentially reducing their sales.

Question 15

What happens at the equilibrium price

Accepted Answer

At the equilibrium price, the quantity demanded by buyers is exactly equal to the quantity supplied by firms. This means that everyone who wants to buy the good at that price is able to, and every producer who wants to sell at that price is able to do so. There is no excess demand or excess supply, and everyone in the market has been satisfied. Therefore, option D is the correct answer. Option A is incorrect because buyers do not have an incentive to buy more at the equilibrium price, they can only buy at the existing quantity demanded. Option B is incorrect because if there were a shortage, the price would rise until it reached the equilibrium price where supply equals demand. Option C is incorrect because firms are already producing at the level that is most profitable for them at the equilibrium price, they have no incentive to increase production.

Question 16

Workers at a bicycle assembly plant currently make minimum wage.If the provincial government increases the minimum wage by $1.00 an hour,what will likely happen

Accepted Answer

Increasing the minimum wage will increase labor costs for the bicycle assembly plant. As a result, the firm will face higher costs of production, leading to a decrease in the supply of bicycles. This is because the firm may need to reduce output or raise prices to maintain profit levels, which will reduce the quantity of bicycles supplied. Therefore, the supply of bicycles will shift to the left.

Question 17

Figure 4-1
 
-Refer to the Figure 4-1.What could cause the movement from S₁ to S

Accepted Answer

The answer of Figure 4-1
 
-Refer to the Figure 4-1.What...

Question 18

Figure 4-1
 
-Refer to the Figure 4-1.What could cause the movement from S to S₁

Accepted Answer

The answer of Figure 4-1
 
-Refer to the Figure 4-1.What...

Question 19

If suppliers expect the price of their product to fall in the future,what will they do

Accepted Answer

If suppliers expect prices to fall in the future, they are likely to increase supply now to sell more at the current higher prices before the expected price drop.

Question 20

Wheat is the main input in the production of flour.All else equal,if the price of wheat decreases,what would we expect

Accepted Answer

If the price of wheat decreases, the cost of production of flour declines, leading to an increase in the supply of flour. Therefore, the best choice is option C, i.e., the supply of flour to increase.

Quiz 4: The Market Forces of Supply and Demand

Figure 4-2 -Refer to the Figure 4-2.What would happen at a price of $35

When evaluating differences or similarities between an increase in supply and an increase in quantity supplied,what do we know

What is the price where quantity supplied equals quantity demanded

What is the unique point at which the supply and demand curves intersect

Figure 4-1 -Refer to the Figure 4-1.What is the movement from S₁ to S called

Figure 4-2 -Refer to the Figure 4-2.What are the equilibrium price and quantity

If a car manufacturer purchases new labour-saving technology for its assembly line,what would we NOT expect

Figure 4-2 -Refer to the Figure 4-2.What would happen at a price of $15

What happens if there is a shortage of a good at the current price

Recent pine beetle infestations that are destroying trees in the western provinces are expected to cause the price of lumber to rise in the next six months.As a result,what can we expect to happen to the supply of lumber

Figure 4-1 -Refer to the Figure 4-1.What is the movement from S to S₁ called

Wheat is the main input in the production of flour.All else equal,if the price of wheat increases,what would we expect

What is another term for equilibrium price

Funsters Inc.sells its most popular doll for $35.It has just learned that its leading competitor is mass producing an excellent copy and plans to flood the market with their $10 doll in six weeks.What should Funsters do

What happens at the equilibrium price

Workers at a bicycle assembly plant currently make minimum wage.If the provincial government increases the minimum wage by $1.00 an hour,what will likely happen

Figure 4-1 -Refer to the Figure 4-1.What could cause the movement from S₁ to S

Figure 4-1 -Refer to the Figure 4-1.What could cause the movement from S to S₁

If suppliers expect the price of their product to fall in the future,what will they do

Wheat is the main input in the production of flour.All else equal,if the price of wheat decreases,what would we expect