If a seller in a competitive market chooses to charge more than the going price, then A other sellers would also raise their prices. B. buyers will make purchases from other sellers. C. the owners of the raw materials used in production would raise the prices for the raw materials. D. the sellers’ profits must increase Reset Selection Question 40 of 50 A rightward shift of a supply curve is called a(n) A. decrease in quantity supplied. B. increase in supply C. increase in quantity supplied D. decrease in supply
Figure 4-21 price 20 s 18 16 14 12 10 8 6 4 2 D 1 23s 6 quantity Refer to Figure 4-21. At a price of $16, there is a A. surplus of 3 units. B. shortage of 3 units C. surplus of 1 unit D. shortage of 1 unit
Suppose the price elasticity of supply for soccer balls is 0.3 in the short run and 12 in the long run. If an increase in the demand for soccer bulls causes the price of soccer balls to increme by 20%, then the quantity supplied of soccer balls will increase by about A6% in the short run and 34% in the long run OB. 0.67% in the short run and 0.17% in the long run OC.3% in the short run and 1.2% in the long ran. OD.66.7% in the short run und 16.7% in the long run. Reset Selection Question 44 of 50 To say that a price ceiling is binding is to say that the price ceiling A cases quantity demanded to exceed quantity Bresults in a shortage C. is set below the quirium price D. All of the above are correct
Ans: B) Buyers will make purchases from other
Under perfect competition , the industry is the price maker
whereas the firm is the price taker. It means there is an unique
price in the market . Firms are not able to change the market
price. They can sell or produce as much as they can at the
prevailing market price.
Ans: B) an increase in supply
A rightward shift in the supply curve shows an increase in
supply whereas a leftward shift in the supply curve shows a
decrease in supply.
Ans: A) surplus of 3 units
At price of $16;
Quantity demanded ( Qd) = 1 units
Quantity supplied ( Qs) = 4 units
When Qs > Qd , then there will be surplus in the market.
Surplus amount = 4 units – 1 units = 3 units.
Ans: A ) 6% in the short-run and 24% in the
Elasticity of supply = % change in quantity supplied / % change
In the short-run;
0.3 = % change in quantity supplied / 20% or 0.20
% change in quantity supplied = 0.20 * 0.3 =0.06 or 6 %
In the long-run;
1.2 = % change in quantity supplied / 20% or 0.20
% change in quantity supplied = 0.20 * 1.2 =0.24 or 24 %
Ans: D) All the above are correct.
When a price ceiling lies below the equilibrium point , then
that price ceiling is called binding.