2015-09-06
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1. Compare the definition of supply with the definition of demand given below. State the similarities and differences.
Supply is a relationship showing the various amounts of a commodity that sellers would be willing and able to make available for sale at alternative prices during a given time period, all other things remaining the same.
Demand is a relationship showing the various amounts of a commodity that buyers would be willing and able to purchase at alternative prices during a given time period, all other things remaining the same.
2. The price of a product varies at different times and places. Using the laws of supply and demand, explain the difference in price between the paired goods.
1. Melons in January are more expensive than melons in July.
2. A can of cola at a beachfront swimming area is more expensive than a can of cola in the local supermarket.
3. Drinking water in communities where the ground water is polluted is more expensive than it is in communities where the ground water is pure.
4. Winter clothing on the store racks in November is more expensive than it is in March.
3. Choose the right variant. Only one is possible.
1. This refers to how many of units are available for people to purchase.
a. Supply
b. Demand
c. Price
2. The law of supply states
a. buyers will purchase more at lower prices than at higher prices.
b. sellers will produce more at higher prices and less at lower prices.
c. quantities offered for sale do not depend on price.
d. consumers buy more at high prices and less at lower prices.
3. According to the law of supply, price and quantity supplied are
a. proportional to one another.
b. proportional to the quantity demanded.
c. independent of one another.
d. directly related to one another.
4. According to the law of supply, when the price of a good increases,
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a. people will choose to purchase less of that good and more of the other goods.
b. people will provide more of the good.
c. people will choose to purchase more of that good and less of other goods.
d. people will provide less of that good.
5. An improvement in technology lowers the cost of producing coffee. At the same time, consumers switch their preferences away from tea towards coffee. We would expect the quantity traded of coffee to
a. Rise or fall depending on whether the price of coffee rises or falls.
b. Fall.
c. Remain the same.
d. Rise.
6. Suppose that there has been a decline in the price of pork. What effect will this have on the market for beef?
a. It will decrease demand and decrease supply.
b. It will decrease demand and decrease quantity supplied.
c. It will decrease quantity demanded and decrease supply.
d. It will decrease quantity demanded and decrease quantity supplied.
7. What do economists use the concept of elasticity for?
a. To measure how one economic variable responds to changes in another economic variable.
b. To explain how producers respond to consumers’ needs.
c. To define the slope of supply and demand curves.
d. All of the above.
