1.Which of the following would shift the supply curve for a product to the right?

a)An increase in the price of a resource used in the good's production

b)The expectation of a lower price in the near future

c)An increase in the price of the product

d)A decrease in the number of producers in the industry

Exhibit 0023

Price

Quantity Demanded

Quantity Supplied

$1.00

100

10

$1.20

90

30

$1.40

80

50

$1.50

70

70

$1.60

60

90

2.If the price of the good described in Exhibit 0023 is $1.60, then there is a:

a)Shortage of 30 units

b)Surplus of 30 units

c)Shortage of 20 units

d)Surplus of 20 units

e)Surplus of 10 units

3.If the price of the good described in Exhibit 0023 is $1.40, then in a free market an economist would expect:

a)Price to increase to $1.60 and remain there.

b)Price to decrease to $1.20 and remain there.

c)Quantity supplied to increase to 70 units as the price adjusts to its equilibrium value

d)Quantity demanded to decrease to 60 units as the price adjusts to its equilibrium value

4.Which of the following would most likely cause both the equilibrium price and equilibrium quantity of cookies to increase (assume cookies are a normal good) :

a)A drop in consumer incomes

b)A rise in the price of dough (an ingredient used to make cookies)

c)A rise in the price of milk (where milk and cookies are complementary goods)

d)A rise in the price of crackers (where crackers and cookies are substitute goods)

.

II.Written Question

For question #8 above, pick any two (2) incorrect answers and use supply and demand graphical analysis to demonstrate why they are incorrect. (Briefly explain your graphical analysis/reasoning in words).

5. Which of the following would shift the supply curve for a product to the right? a) An increase in the price of a resource used in the good's production b) The expectation of a lower price in the near future c) An increase in the price of the product a) A decrease in the number or producers in the industry Exhibit 0023 Price | Quantity Demanded | Quantity Supplied $1.00 100 10 $1.20 90 30 $1.40 80 50 $1.50 70 70 $1.60 60 90 6. If the price of the good described in Exhibit 0023 is $1.60, then there is a: a) Shortage of 30 units b) Surplus of 30 units c) Shortage of 20 units d) Surplus of 20 units e) Surplus of 10 units 7. If the price of the good described in Exhibit 0023 is $1.40, then in a free market an economist would expect: a) Price to increase to $1.60 and remain there. b) Price to decrease to $1.20 and remain there. c) Quantity supplied to increase to 70 units as the price adjusts to its equilibrium value d) Quantity demanded to decrease to 60 units as the price adjusts to its equilibrium value 8. Which of the following would most likely cause both the equilibrium price and equilibrium quantity of cookies to increase (assume cookies are a normal good) : a) A drop in consumer incomes b) A rise in the price of dough (an ingredient used to make cookies) c) A rise in the price of milk (where milk and cookies are complementary goods) d) A rise in the price of crackers (where crackers and cookies are substitute goods)