Week 1

Question 1

Suppose that the incomes of buyers in a particular market for a normal good decline and there is also a reduction in input prices. What would we expect to occur in this market?

Answer 1

The equilibrium price would decrease but the impact on the amount sold in the market would be ambiguous

Question 2

‘Because of unseasonably cold weather, the supply of oranges has substantially decreased’. This statement indicates that:

Answer 2

the amount of oranges that will be available at various prices has declined

Question 3

Suppose you make jewellery. If the price of gold rises, we would expect you to:

Answer 3

be willing and able to produce less jewellery than before at each possible price

Question 4

Suppose an outbreak of Varroa kills off many beehives. Which of the following would not occur as a direct result of this event?

Answer 4

honey buyers would not be willing to buy as much at previous market prices

Question 5

New Zealand sphagnum moss is an input used in the production of orchids. If the price of sphagnum moss increases, but nothing else changes, this will cause:

Answer 5

the supply of orchids to decrease

Question 6

Suppose that a decrease in the price of X results in more of good Y sold. This would mean that X and Y are:

Answer 6

complementary goods

Question 7

Table 4-2
Price ($) - 10
Quantity demanded- 15
Quantity supplied - 8

Answer 7

a shortage of 7 units would exist and price would tend to rise

Question 8

Graphically, the market demand curve is:

Answer 8

the horizontal sum of individual demand curves

Question 9

Graph - Demand shifting to the right called

Answer 9

a decrease in demand

Question 10

At the equilibrium price:

Answer 10

everyone in the market has been satisfied

Question 11

A decrease in the number of sellers supplying a good will shift the:

Answer 11

supply curve to the left

Question 12

Boris discovers a new technology that can produce economics textbooks at triple the speed that textbooks are usually produced. What effect can Boris expect this discovery to have on the supply of economics textbooks?

Answer 12

the supply curve will shift to the right

Question 13

A market demand is:

Answer 13

a horizontal summation of individual demand curves

Question 14

Demand for fish is higher in India than Australia because

Answer 14

there are more buyers in the Indian market