5. An increase in demand and a decrease in supply will A. Reduce price but may i

Question

5. An increase in demand and a decrease in supply will A. Reduce price but may incrcase, decrcase, or leave quantity unchanged B. Questions 11-13 are based on the following information: Jennifer's budget line has intercepts of X-20 and Y-30, and Px-S10, Increase price but reduce quantity Reducc price but incrcasc quantity Increase price but may increase, decrease, or leave quantity unchanged 11. Jennifer's budget (income) is A. 100 B. 200 C. 250 D. 300 6. An increase in the price of a commodity results in A. An incrcase in the demand for the commodity B. An increase in the quantity demanded of the commodity C. A decrease in the quantity demanded of the commodity D. A decrease in the demand for the commodity 18 A. 10/3 B. 20/3 C. 25/3 D. 10 7. The law of demand is reflected in A. The negative slope of the demand curve. B. A decrease in the quantity demanded of the commodity when its price rises C. An incrcase in the quantity demanded of the commodity when its price falls D. All of the above. 13. What is the slope of the budget line (Y on vertical)? .-1 8. The market demand curve for a commodity incrcases (shifts to the right) when A. The price of the commodity falls B. Consumers' income falls C. The price of a substitute commodity rises. D. The price of a complementary commodity rises. 14. Indifference curves a may sometimes intersect. b. are contour lines only of a lincar utility function. c. are convex if the utility function is a Cobb-Douglas function. d. shift when prices change 9. A leftward shift in the supply curve is referred to as A. A decrease in supply B. A decrease in the quantity supplied of the commodity C. An increase in supply D. An increase in the quantity supplied of the commodity 15. For an individual who consumes only two goods, x and y, the opportunity cost of consuming one more unit of x in terms of how much y must be given up is reflected by a. the individual's marginal rate of substitution. b. the market prices of x and y c. e slopc of the individual's indifference curve. d. none of the above. 10. An cquilibrium price is A. The market-clearing price. B. The price at which quantity demanded is equal to quantity supplicd. C. Is determined by the forces of demand and supply D. All of the above. 16. If bundles of goods A and B lie on the same indifference curve, one can assume the individual a. prefers bundle A to bundle B b. prefers bundle B to bundle A. c. eoys bundle A and B equally d. bundle A contains the same goods as bundle B

Explanation / Answer

Ans5) D is the correct option. Increase price but may increase decrease or leave quantity unchanged. Equilibrium price will increase but nothing can be said about the equilibrium quantity until the magnitude of change is given.

Ans6) C is the correct option. A decrease in quantity demanded of the commodity. When the price of a good increases the quantity demanded falls and vice versa.

Ans7) D is the correct option. All of the above. The law of demand states the negative relationship between price and the quantity demanded which is why the demand curve slopes downward.

Ans8) C is the correct option. The price of a substitute commodity rises. When the price of a substitute good rises people will shift their demand and the demand for a particular good will increase.

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