21) All of the following are non-price determinants of supply except
A) costs.
B) technology.
C) income.
D) future expectations.
22) Which of the following would cause a short-run decrease in the quantity supplied of personal computers?
A) The price of CPUs decreases.
B) The price of software decreases.
C) The number of PC manufacturers decreases.
D) The cost of manufacturing PCs decreases.
23) Which of the following will not cause a short-run shift in the supply curve?
A) a change in the number of sellers
B) a change in the cost of resources
C) a change in the price of the product
D) a change in future expectations
24) Which of the following applies most generally to supply in the long run?
A) Average total cost must decline.
B) Producers are able to make change in all their factors of production.
C) Producers are only able to make change in their variable factors of production.
D) All original producers will leave the market.
25) Which of the following could cause a long-run shift in demand as part of the “guiding function of price”?
A) a change in tastes and preferences
B) an increase in price caused by a shift in supply
C) income shift caused by an economic recession
D) an increase in number of buyers
26) Which of the following is a common determinant of both supply and demand?
A) income
B) future expectations
C) tastes and preferences
D) sales tax
27) Which of the following indicates that there is a shortage in the market?
A) Demand is rising.
B) Demand is falling.
C) Price is rising.
D) Price is falling.
28) Which of the following is correct? The supply curve will shift when
A) income, preferences, or the number of suppliers change.
B) income, preferences, or the number of buyers change.
C) income, preferences, or production technology changes.
D) the number of sellers and the number of buyers change.
E) production technology and input prices change.
29) A fall in the price of pesticide use in the production of cotton will
A) decrease the supply of cotton, causing the supply curve of cotton to shift to the left.
B) increase the supply of cotton, causing the supply curve of cotton to shift to the left.
C) cause a downward movement along the supply curve of cotton.
D) have no effect on the supply of cotton.
E) None of the above
30) Which of the following would lead to a short-run market surplus for tomatoes?
A) The price of tomatoes increases.
B) A new government study shows that tomatoes have a greater risk of contamination from salmonella.
C) An increase in the price of potatoes.
D) A decrease in the number of tomato growers.
The Correct Answer and Explanation is :
Here are the correct answers for each question along with explanations:
21) All of the following are non-price determinants of supply except:
- Answer: C) income. Explanation: Non-price determinants of supply are factors that affect the supply of a good or service but are not related to its price. These include production costs, technology, and future expectations. Income, however, is a non-price determinant of demand, not supply. For example, an increase in consumer income increases demand, which affects how much of a product is bought but does not directly affect the supply of the product.
22) Which of the following would cause a short-run decrease in the quantity supplied of personal computers?
- Answer: C) The number of PC manufacturers decreases. Explanation: A decrease in the number of PC manufacturers means fewer firms are producing personal computers, leading to a decrease in the overall quantity supplied in the short run. The other options either do not impact the supply or cause it to increase (e.g., cheaper components or lower manufacturing costs would increase supply).
23) Which of the following will not cause a short-run shift in the supply curve?
- Answer: C) a change in the price of the product. Explanation: A change in the price of the product leads to a movement along the supply curve (a change in quantity supplied), not a shift of the supply curve. A shift in the supply curve is caused by changes in factors like the number of sellers, the cost of resources, or future expectations.
24) Which of the following applies most generally to supply in the long run?
- Answer: B) Producers are able to make changes in all their factors of production. Explanation: In the long run, producers can adjust all factors of production (e.g., labor, capital, technology) unlike in the short run, where some factors might be fixed. This flexibility allows firms to increase or decrease their production capacity based on changes in the market conditions.
25) Which of the following could cause a long-run shift in demand as part of the “guiding function of price”?
- Answer: A) a change in tastes and preferences. Explanation: A change in consumer preferences can lead to a shift in demand. For example, if a new trend makes a product more desirable, the demand for it can increase in the long run. The guiding function of price helps direct resources toward the most demanded goods.
26) Which of the following is a common determinant of both supply and demand?
- Answer: B) future expectations. Explanation: Expectations about future prices can affect both supply and demand. If producers expect higher future prices, they may reduce current supply. Consumers might also increase demand if they expect prices to rise in the future.
27) Which of the following indicates that there is a shortage in the market?
- Answer: C) Price is rising. Explanation: A shortage occurs when the quantity demanded exceeds the quantity supplied at the current price. In response, prices tend to rise as consumers bid for the limited quantity available.
28) Which of the following is correct? The supply curve will shift when:
- Answer: E) production technology and input prices change. Explanation: Changes in production technology and input prices directly affect the cost of production, which can shift the supply curve. For example, improvements in technology can lower costs and shift the supply curve to the right (increase in supply).
29) A fall in the price of pesticide use in the production of cotton will:
- Answer: B) increase the supply of cotton, causing the supply curve of cotton to shift to the right. Explanation: A decrease in the cost of producing cotton (through lower pesticide costs) increases supply, shifting the supply curve to the right. This is because firms can produce more cotton at the same price, increasing overall market supply.
30) Which of the following would lead to a short-run market surplus for tomatoes?
- Answer: A) The price of tomatoes increases. Explanation: A higher price for tomatoes increases the quantity supplied but decreases the quantity demanded. In the short run, this can result in a surplus, where there is more of the good available than consumers are willing to buy at that price.
I will generate a visual representation of the concepts, focusing on shifts in supply and demand, which are key to understanding these questions.
Here is an educational chart that visually demonstrates how shifts in supply and demand work. The supply curve shifts right due to a decrease in production costs, and the demand curve shifts right due to a change in tastes and preferences. This helps illustrate the concepts discussed in the questions.
Let me know if you’d like any further explanations!