F3 - SEM1 - Chapter Exercise - 2 Flashcards
Which of the following statement is INCORRECT?
A. Demand curve is downward-sloping
B. Supply curve is upward-sloping
C. Market demand curve is the summation of all demand curves of the individuals in the market
D. According to the law of demand, price and quantity demanded move in the same direction
2 Chapter Exercise
D
According to the law of demand, price and quantity demanded move in OPPOSITE direction - When price increases, quantity demanded decreases.
2 Chapter Exercise
Which of the following statement is correct?
Refer to the following demand and supply schedules of Good X.
Unit Price $100, Quantity demanded 80, Quantity supplied 200
Unit Price $90, Quantity demanded 100, Quantity supplied 160
Unit Price $80, Quantity demanded 120, Quantity supplied 120
Unit Price $70, Quantity demanded 140, Quantity supplied 80
Unit Price $60, Quantity demanded 160, Quantity supplied 60
Unit Price $50, Quantity demanded 180, Quantity supplied 40
2 Chapter Exercise
D
Equilibrium price is the price at which quantity demanded and quantity supplied are equal
Therefore, equilibrium price is $80 and equilibrium quantity is 120. Total revenue = 80 x 120 = $9600
2 Chapter Exercise
Which of the following will increase the demand for iPhone 12?
A. The price of iPhone 12 decrease
B. More people prefer smartphones produced by Samsung instead of iPhone
C. The income of people increases
D. All of the above.
2 Chapter Exercise
C is CORRECT - Income of people increases will increase demand for iPhone 12
A is WRONG - decrease in price of iPhone will increase QUANTITY DEMANDED of iPhone
B is WRONG - fewer people prefer iPhone will decrease demand for iPhone
2 Chapter Exercise
Which of the following is the reason for the increase in equilibrium price and decrease in equilibrium quantity for milk powder products in Hong Kong?
A. Many mainland tourists buy milk powder products in Hong Kong
B. Milk powder products are found to contain the harmful substance
C. Some milk powder producers leave the industry
D. The cost of producing milk powder products decreases
2 Chapter Exercise
C is CORRECT - decrease in number of sellers => decrease supply => increase in equilibrium price and decrease in equilibrium quantity
A is WRONG - increase in number of customers => increase demand => increase in both equilibrium price and quantity
B is WRONG - decrease in number of customers => decrease demand => decrease in both equilibrium price and quantity
D is WRONG - decrease in cost of production => increase supply => decrease in equilibrium price and increase in equilibrium quantity
2 Chapter Exercise
The following diagram shows the market supply and demand curves of face masks in Hong Kong. The original equilibrium point is E
Suppose more people decide to wear face masks to prevent the spread of respiratory diseases and there is an increase in the number of face mask producers. As a result, the new equilibrium point would be
2 Chapter Exercise
C
Increase in number of people wearing face masks
=> increase in number of customers and demand for face masks
=> D1 shifts to D2 (shift rightward)
Increase in number of face mask producers
=> increase supply
=> S1 shifts to S3 (shift rightward)
2 Chapter Exercise
According to research evidence, one of the substances in beer has proved to be good for the healthy development of bones. This will lead to an increase in
- the supply of beer
- the equilibrium quantity of beer
- the demand for beer
A. 1 and 2
B. 1 and 3
C. 2 and 3
D. 1 and 2 and 3
2 Chapter Exercise
C
beer is good for health
=> number of customer increases
=> demand increases
but supply does not change
=> equilibrium quantity / quantity transacted increases
2 Chapter Exercise
State the law of demand
2 Chapter Exercise
The law of demand states
when price rises => quantity demanded will decrease
when price decreases => quantity demanded will increase
other factors holding constant
2 Chapter Exercise
State the law of supply
2 Chapter Exercise
The law of supply states
when price rises => quantity supplied will increase
when price decreases => quantity supplied will decrease
other factors holding constant
2 Chapter Exercise
What is equilibrium price?
2 Chapter Exercise
Market equilibrium is a point where demand curve and supply curve intersect each other, at which quantity demanded equals quantity supplied
2 Chapter Exercise
The income of people decreases during a economic recession. With the aid of a diagram
a. explain how the demand for smartphones would be affected
b. explain how the equilibrium price of smartphones would be affected
c. explain how the equilibrium quantity of smartphones would be affected
d. explain how the total revenue of smartphones would be affected
2 Chapter Exercise
