Quiz 7

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Louisiana State University *

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201

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Economics

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Apr 3, 2024

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Uploaded by GeneralMorning13907

Quiz 1: Supply and Demand Analysis 1. What happens to equilibrium price and quantity when both demand and supply increase? a) Equilibrium price increases, equilibrium quantity decreases b) Equilibrium price decreases, equilibrium quantity increases c) Equilibrium price increases, equilibrium quantity increases d) Equilibrium price decreases, equilibrium quantity decreases 2. Define the law of demand. a) The higher the price, the lower the quantity demanded b) The higher the price, the higher the quantity demanded c) The lower the price, the lower the quantity demanded d) The lower the price, the higher the quantity demanded 3. Describe the concept of elasticity of supply. a) The responsiveness of quantity demanded to changes in price b) The responsiveness of quantity supplied to changes in price c) The responsiveness of demand to changes in income d) The responsiveness of demand to changes in price 4. How does a decrease in the price of a substitute affect the demand curve? a) Shifts the demand curve to the right b) Shifts the demand curve to the left c) Moves along the demand curve to a lower quantity demanded d) Moves along the demand curve to a higher quantity demanded 5. What factors can shift the demand curve? a) Changes in technology and production costs b) Changes in consumer preferences and income c) Changes in government regulations and taxes d) Changes in the prices of related goods 6. Describe a situation where price floors might be implemented by the government. a) To prevent prices from falling too low b) To prevent prices from rising too high c) To encourage producers to increase production d) To encourage consumers to decrease consumption 7. What is the impact of a subsidy on producers in a market with perfectly elastic demand? a) Producers bear the entire burden of the subsidy b) Consumers bear the entire burden of the subsidy c) Both producers and consumers share the burden of the subsidy equally d) There is no impact on producers due to perfectly elastic demand 8. In the long run, how do firms respond to economic losses in a perfectly competitive market? a) Exit the market b) Enter the market c) Increase production d) Decrease production 9. What is the difference between a normal good and an inferior good? a) Normal goods have downward-sloping demand curves, while inferior goods have upward-sloping demand curves b) Normal goods have elastic demand, while inferior goods have inelastic demand c) Normal goods are necessities, while inferior goods are luxuries d) Normal goods are demanded more as income increases, while inferior goods are demanded less as income increases 10. How does an increase in the price of a complement affect the demand curve? a) Shifts the demand curve to the right b) Shifts the demand curve to the left c) Moves along the demand curve to a lower

quantity demanded d) Moves along the demand curve to a higher quantity demanded

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