Tutorial Question:

1. Given that the supply curve is fixed, what effect will each of the following have upon the demand for product B?

(a) Product B becomes more fashionable.

(b) The price of product C, a popular substitute for B, goes down.

(c) Consumers expect declining prices and falling incomes in the future.

(d) There is a rapid upsurge in population growth.

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2. Given that the demand curve is fixed, what effect will each of the following have upon the supply of product B?

(a) There is a technological advance in the methods of producing B.

(b) There is a decline in the number of firms in industry that produces B.

(c) There is an increase in the prices of resources required to produce B.

(d) There is an expectation that the equilibrium price of B will be lower in the future than it is currently.

(e) There is a decline in the price of product A, a good whose production requires substantially the same techniques and resources as does the production of B.

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1. 'Decreased production of bread leads to a higher price, which in turn decreases demand.' Do you agree with his reasoning? Briefly explain using a graph

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1. Briefly explain whether each of the following statements is true or false.

a. If the demand for and supply of a product both increase, the equilibrium quantity of the product must also increase.

b. If the demand for and supply of a product both increase, the equilibrium price of the product must also increase.

c. If the demand for a product decreases and the supply of the product increases, the equilibrium price of the product may increase or decrease, depending on whether supply or demand has shifted more.

True/False

Please answer the following true/false questions and explain your answer.

1.	An increase in the number of consumers in the market will shift the demand curve to the right.
2.	The demand for inferior goods will rise when disposable income falls.
3.	A negative change in demand implies a move along the demand curve.
4.	Demand curves show that there is a negative relationship between demand and price.
5.	Two goods are said to be substitutes when the price of one good rises and the demand for another increases.
6.	If the price of a good rises and the demand for another falls, the two goods are said to be complements.
7.	A change in demand occurs when a hairdresser raises the price of haircuts and the salon experiences a decline in the number of haircuts.
8.	Expectations of a price rise will increase the demand for a good.
9.	Shortages imply that prices are too low to elicit the production needed to satisfy the quantities desired by consumers.
10.	Surpluses are situations where suppliers can't get enough customers to buy what is produced because prices are too high.

Multiple choice

1.If X is a normal good, a rise in money income will shift the: A.supply curve for X to the left. B.supply curve for X to the right. C.demand curve for X to the left. D.demand curve for X to the right.

2. The term 'quantity demanded' refers to: A. the entire series of prices and quantities that comprise the demand schedule. B. a situation where the income and substitution effects do not apply. C. the amount of a product that will be purchased at some specific price. D. none of the answers given.

3.The law of supply indicates that: A.producers will offer more of a product at high prices than they will at low prices. B.the product supply curve is down-sloping. C.consumers will purchase less of a good at high prices than they will at low prices. D.producers will offer more of a product at low prices than they will at high prices.

4.An increase in the price of oranges would lead to: A.an increased supply of oranges. B.a reduction in the prices of inputs used in orange production. C.an increased demand for oranges. D.a movement up the supply curve for oranges.

5.Which of the following will not cause the demand for product K to change? A.A change in the price of close-substitute product J. B.An increase in consumer incomes. C.A change in the price of K. D.A change in consumer tastes.