SOPHIA ECON102 Unit 2 Challenge 1 Latest 2022 May

ECON102 Macroeconomics

Unit 2 Challenge 1

Using the above graph, which of the following statements is FALSE relating to the Law of Demand?

a.)When price decreases, the quantity demanded will always increase by the same amount.

b.)A movement along the demand curve is due to a change in price.

c.)A reduction in price will result in an increase in quantity.

d.)The Law of Demand expresses a negative relationship between quantity on the X axis and price on the Y axis.

During the 18th Century, as troubles with Britain escalated, American colonists stopped drinking British tea, and instead started drinking coffee.

This is an example of which factor of demand?

a.)Change in the price of the good

b.)Change in price of a substitute

c.)Change in taste/preference

d.)Change in the price of a complement

Why does a supply curve slope upward?

a.)Because there is an inverse relationship between price and quantity supplied.

b.)Because costs of production eventually decrease.

c.)Because as prices increase, opportunity cost of producing goods decrease.

d.)Because as prices increase, producers are willing and able to supply more.

Which of the following causes a shift in supply to the left?

a.)An increase in technology

b.)A decrease in the price of inputs

c.)A natural disaster that destroys farms and factories

d.)Education that leads to a more skilled workforce

Kate is willing to pay $12,000 a year in college tuition, but the market price for the courses she wants to take is only $8,000 a year.

Her consumer surplus will be _________ over the course of one year.

a.)$8,000

b.)$20,000

c.)$12,000

d.)$4,000

A firm would stop producing when producer surplus is __________.

a.)equal to zero

b.)equal to opportunity cost

c.)negative

d.)smaller than deadweight loss

If the price of organic vegetables reaches equilibrium, which of the following describes what will happen?

a.)There will be no market basis for the price to change.

b.)There will be a shortage because the organic vegetables will sell out.

c.)The price will continue to rise.

d.)The price will eventually fall.

When price decreases, the quantity supplied will __________.

a.)decrease

b.)increase

c.)increase or decrease in price, depending on elasticity of supply

d.)remain the same