DEMAND AND SUPPLY According to the law of demand, an increase in the price of coffee leads to: decrease in the quantity demanded of coffee, ceteris paribus. a decrease in the demand for coffee, shown as a leftward shift. increase in the quantity demanded of coffee, ceteris paribus. an increase in the demand for coffee, shown as a rightward shift. 1. a. b. с. d. According to the law of supply, an increase in the price of apples leads to: an increase in the quantity supplied of apples, ceteris paribus. an increase in the supply for apples, shown as a rightward shift. decrease in the quantity supplied of apples, ceteris paribus. a decrease in the supply for apples, shown as a leftward shift. 2. a., b. с. d. A market is in equilibrium when: 3. quantity supplied is equal to quantity demanded. quantity supplied is greater than quantity demanded. quantity demanded is greater than quantity supplied. supply is equal to demand. b. с. d. while prices below equilibrium lead Prices above equilibrium lead to 4. to market surpluses and increases in price; market shortages and decreases in price. market surpluses and decreases in price; market shortages and increases in price. market-shortages-and increases in price; market surpluses and decreases in price. market shortages and decreases in price; market surpluses and increases in price. а. с. d. . If quantity supplied exceeds quantity demanded, the resulting market firms to motivates 5. product price. shortage; raise shortage; lower surplus; raise surplus; lower с. a. d. b. Markets tend to move toward equilibrium: 6. if government does an effective job of setting price limits. if prices are able to change to clear surpluses and shortages. when output can be restricted to offset falling prices. when consumer demand can be manipulated to ensure low prices. а. b. с. d. Which of the following will lead to a decrease in the demand for water skis? A decrease in the price of motor-beats-(a-complementary -geod) A decrease in the price of knee boards (a substitute good) An increase in the price of water skis d. A decrease in the price of water skis 7. a. b с. 63 Chapter 4 Assignments