Practice Questions
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What happens to the equilibrium price of a good when there is an increase in supply, assuming demand remains constant?
When more of a good is available, the price usually goes down. Other options are incorrect because Some might think that more supply means higher pric...
How does an external shock, such as a sudden increase in oil prices, affect the market equilibrium for gasoline?
When oil prices go up, it costs more to make gasoline. Other options are incorrect because Some might think that higher oil prices would increase dema...
If a technological advancement increases the efficiency of production for a good, resulting in a rightward shift of the supply curve, how does this affect producer surplus?
When production becomes more efficient, producers can make more goods at a lower cost. Other options are incorrect because Some might think that more ...
How would an increase in consumer income, an external shock, affect the supply and demand curve in a market where the law of supply holds?
When people have more money, they buy more things. Other options are incorrect because This answer suggests that supply goes down when income rises; T...
How does a government-imposed price ceiling affect consumer surplus in a competitive market, considering the law of demand?
A price ceiling makes goods cheaper, but it can lead to fewer goods available. Other options are incorrect because This answer thinks that lower price...
What happens to the equilibrium price of a good when there is an increase in supply, assuming demand remains constant?
When more of a good is available, sellers often lower prices to attract buyers. Other options are incorrect because Some might think more supply means...
What happens to the demand for a product when consumer income increases, assuming the product is a normal good?
When people earn more money, they can buy more things. Other options are incorrect because Some might think that higher income means less demand; It's...
What occurs at the market equilibrium point in a supply and demand analysis?
At market equilibrium, the amount people want to buy matches the amount sellers want to sell. Other options are incorrect because Some might think the...
When the wage for workers at a peach farm increases, and at the same time research shows that peaches lower cancer risk, the simultaneous effect on the market will likely result in a(n) _____ in supply and a(n) _____ in demand.
When wages go up, it costs more to produce peaches. Other options are incorrect because This answer suggests that more peaches would be supplied, whic...
Which of the following scenarios would likely lead to an increase in the price of peaches in a competitive market? Select all that apply.
None of the options would increase the price of peaches. Other options are incorrect because Higher wages for workers mean farms spend more, but this ...
If wages for peach farm workers increase while a health study shows peaches reduce cancer risk, what happens to the market for peaches?
When workers earn more, they can buy more peaches. Other options are incorrect because This answer suggests both supply and demand go down; This optio...
If a recent study shows that peaches significantly reduce the risk of cancer, leading to a surge in consumer purchases of peaches, what is the likely effect on the supply side of the market for peaches?
When more people want peaches, farmers see a chance to make more money. Other options are incorrect because Some might think that farmers can't keep u...
Arrange the following events in the correct order to illustrate the impact on the peach market due to changes in external factors: A. Medical researchers find that eating peaches reduces cancer risk. B. The demand curve for peaches shifts to the right. C. Peach farm workers demand higher wages. D. The supply curve for peaches shifts to the left.
First, researchers find that peaches can help reduce cancer risk. Other options are incorrect because This order suggests that workers' wage demands c...
A new health study reveals that consuming avocados significantly lowers cholesterol levels, while at the same time, a drought severely reduces avocado supply. How should these events be classified in terms of supply and demand analysis?
The study shows more people want avocados for health. Other options are incorrect because This choice suggests fewer people want avocados and more are...
If a rise in consumer income leads to an increase in the demand for luxury cars, then a decrease in the number of automobile manufacturers due to increased production costs is analogous to what change in the market for luxury goods?
When fewer manufacturers make cars, there are less cars available. Other options are incorrect because Some might think that more cars means more supp...
A new health study reveals that consuming oranges significantly boosts immunity, leading to increased consumer interest. Simultaneously, severe weather conditions have reduced orange crop yields, resulting in fewer oranges available in the market. How would these changes likely affect the market for oranges?
When more people want oranges but there are fewer available, prices go up. Other options are incorrect because This option suggests that more oranges ...
If wages for peach farm workers increase while studies show peaches have health benefits, what is the likely market impact?
When workers earn more, they can produce fewer peaches because it costs more to hire them. Other options are incorrect because This option suggests th...
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