ECONOMICS ASSIGNMENT 6 QUESTIONS AND ANSWERS
NB!!! Please carefully analyse the questions as they tend to slightly differ.
1. The market for good A is in equilibrium. Then a technological innovation reduces the
cost of production of good A and, simultaneously, the price of a complement good
increases. The equilibrium price of good A will either increase, decrease, or stay the
same, and the equilibrium quantity will increase.
FALSE
2. Suppose we observe that the equilibrium quantity of a good has increased
significantly in recent years, with little or no change in equilibrium price. The most likely
explanation is that supply has increased and demand has decreased.
FALSE
3. The market for good A is in equilibrium. Then a technological innovation reduces the
cost of production of good A and, simultaneously, the price of a complement good
increases. The equilibrium price of good A will decrease and the equilibrium quantity will
either increase, decrease, or stay the same.
TRUE
4. Oil is the main component in the manufacture of plastic bags. If the price of oil were
to increase, the price of plastic bags would increase and the quantity would decrease.
TRUE
5. Suppose that the demand and supply of a good increase simultaneously. The effect
on the equilibrium price of the good will be ambiguous, but the equilibrium quantity will
decrease.
FALSE
6. When supply shifts to the right and demand stay constant, the equilibrium price
decreases and the equilibrium quantity increases.
, FALSE
7. Suppose that the demand and supply of a good increase simultaneously. The effect
on the equilibrium price of the good will be ambiguous, but the equilibrium quantity will
increase.
TRUE
8. If the demand for motor vehicles decreases due to a drop in consumer income, and if,
at the same time, increases in factor prices cause the supply of motor vehicles to
decrease, the price of motor vehicles will increase.
FALSE
9. The market for personal drones (small remotely controlled unmanned flying robots)
has undergone some changes over the past two years. As a result of these changes,
the equilibrium quantity of drones has increased substantially with almost no change in
the equilibrium price. Which of the following is the most likely explanation for these
changes? Over the past two years’ demand has increased and supply has decreased.
FALSE
10. Suppose we observe that the equilibrium price of a particular good has decreased
significantly over the past 5 years, with virtually no change in the equilibrium quantity.
Which of the following is the most likely explanation? Over the past 5 years, supply has
increased but demand has decreased.
TRUE
11. An increase in demand coupled with a decrease in supply would necessarily result
in a higher equilibrium price.
FALSE
NB!!! Please carefully analyse the questions as they tend to slightly differ.
1. The market for good A is in equilibrium. Then a technological innovation reduces the
cost of production of good A and, simultaneously, the price of a complement good
increases. The equilibrium price of good A will either increase, decrease, or stay the
same, and the equilibrium quantity will increase.
FALSE
2. Suppose we observe that the equilibrium quantity of a good has increased
significantly in recent years, with little or no change in equilibrium price. The most likely
explanation is that supply has increased and demand has decreased.
FALSE
3. The market for good A is in equilibrium. Then a technological innovation reduces the
cost of production of good A and, simultaneously, the price of a complement good
increases. The equilibrium price of good A will decrease and the equilibrium quantity will
either increase, decrease, or stay the same.
TRUE
4. Oil is the main component in the manufacture of plastic bags. If the price of oil were
to increase, the price of plastic bags would increase and the quantity would decrease.
TRUE
5. Suppose that the demand and supply of a good increase simultaneously. The effect
on the equilibrium price of the good will be ambiguous, but the equilibrium quantity will
decrease.
FALSE
6. When supply shifts to the right and demand stay constant, the equilibrium price
decreases and the equilibrium quantity increases.
, FALSE
7. Suppose that the demand and supply of a good increase simultaneously. The effect
on the equilibrium price of the good will be ambiguous, but the equilibrium quantity will
increase.
TRUE
8. If the demand for motor vehicles decreases due to a drop in consumer income, and if,
at the same time, increases in factor prices cause the supply of motor vehicles to
decrease, the price of motor vehicles will increase.
FALSE
9. The market for personal drones (small remotely controlled unmanned flying robots)
has undergone some changes over the past two years. As a result of these changes,
the equilibrium quantity of drones has increased substantially with almost no change in
the equilibrium price. Which of the following is the most likely explanation for these
changes? Over the past two years’ demand has increased and supply has decreased.
FALSE
10. Suppose we observe that the equilibrium price of a particular good has decreased
significantly over the past 5 years, with virtually no change in the equilibrium quantity.
Which of the following is the most likely explanation? Over the past 5 years, supply has
increased but demand has decreased.
TRUE
11. An increase in demand coupled with a decrease in supply would necessarily result
in a higher equilibrium price.
FALSE
