24. Given an initial market equilibrium with a downward sloping market demand curve and an upward sloping market supply curve, if demand decreases and supply increases, which of the following is the most likely change in price and quantity needed to reach the new equilibrium? 1 Price, Quantity unable to determine. b. Price unable to determine, 1 Quantity. 1 Price, Quantity unable to determine. d. Price unable to determine, Quantity. e. None of the above c. 25. Assume the market for crude oil is at equilibrium and can be represented by a downward sloping market demand and an upward sloping market supply curve. If the President authorizes the release of crude oil from the strategic petroleum reserve, disturbing the previous equilibrium by increasing the number of potential suppliers of crude oil, we predict: The equilibrium price of crude oil will increase and the equilibrium quantity will decrease. The equilibrium price of crude oil will increase and the equilibrium quantity will increase. The equilibrium price of crude oil will decrease and the equilibrium quantity will increase. The equilibrium price of crude oil will decrease and the equilibrium quantity will decrease. I None of the above a b. c. d. e. 26. a. Assume the market for home heating oil is at equilibrium and can be represented by a downward sloping market demand and an upward sloping market supply curve. If this equilibrium is then disturbed by a decrease in the price of crude oil, an input into the production of home heating oil, we predict: The equilibrium price of home heating oil will increase and the equilibrium quantity will decrease The equilibrium price of home heating oil will increase and the equilibrium quantity will increase The equilibrium price of home heating oil will decrease and the equilibrium quantity will increase. The equilibrium price of home heating oil will decrease and the equilibrium quantity will decrease. None of the above. b. c. d. e. 27. a. b. If an unexpected winter storm strikes (thereby increasing the demand for home heating oil) at the same time as crude oil prices decline, then we predict: The equilibrium price of home heating oil will increase and the equilibrium quantity will decrease. The equilibrium price of home heating oil will increase and the equilibrium quantity will increase. The equilibrium price of home heating oil will decrease and the equilibrium quantity will increase. d. The equilibrium price of home heating oil will decrease and the equilibrium quantity will decrease. None of the above. c. e. 28. The President's actions were dictated by a view that heating oil prices will rise considerably unless this action was taken, that consumers would be hurt by these price increases, that consumer protection is a proper aim of government action and that releases from the petroleum reserve will influence the price of home heating oil. The President's advisers cite empirical studies showing a relationship between releases from the strategic petroleum reserve, the price of crude oil and the price of home heating oil; the President believes that home heating oil prices should not be allowed to rise above certain levels, but he readily admits this is only his opinion (one not likely shared by the Chairman of Exxon or OPEC ministers). In this case, the decision to release crude oil from the strategic reserves can best be characterized as an example of: Positive economics. Normative economics. Economic policy None of the above. a. b. c. d
