QUESTION 1 From 2010 to 2012, the equilibrium price of natural gas fell while, o
ID: 1149070 • Letter: Q
Question
QUESTION 1
From 2010 to 2012, the equilibrium price of natural gas fell while, over this same time period, the equilibrium quantity increased. Does the fact that the equilibrium quantity increased while the equilibrium price fell mean that the supply curve of natural gas must be downward-sloping, in violation of the law of supply?
Yes, the law of supply is violated in this case. Markets for natural resources are subject to disruptions caused by weather and equipment failure, so they do not obey the laws of supply and demand.
No, because the demand for natural gas could have increased over that interval, which would explain the pattern of falling price with rising quantity.
No, this information is perfectly consistent with an upward-sloping supply curve shifting to the right.
Yes, the law of supply is violated in this case - probably as a result of a change in technology, which always disrupts the law of supply.
QUESTION 4
Suppose a decrease in demand causes the equilibrium price of oil to fall from $80 to $50 per barrel. Which of the following are accurate descriptions of the consequence? (Pay attention to the terminology. 'Change in supply' does not mean the same thing as 'Change in quantity supplied.') Choose all that apply.
The supply of oil would decrease.
The supply curve would not shift.
The supply curve would shift to the left.
The quantity supplied would fall.
1 points
QUESTION 5
If the government offers solar panel producers a subsidy (the opposite of a tax), what will happen in the market for solar panels?
The supply curve will shift to the left, decreasing supply.
The supply curve will shift to the right, increasing supply.
The supply curve will shift to the left, increasing supply.
The supply curve will shift to the right, decreasing supply.
QUESTION 1
From 2010 to 2012, the equilibrium price of natural gas fell while, over this same time period, the equilibrium quantity increased. Does the fact that the equilibrium quantity increased while the equilibrium price fell mean that the supply curve of natural gas must be downward-sloping, in violation of the law of supply?
Yes, the law of supply is violated in this case. Markets for natural resources are subject to disruptions caused by weather and equipment failure, so they do not obey the laws of supply and demand.
No, because the demand for natural gas could have increased over that interval, which would explain the pattern of falling price with rising quantity.
No, this information is perfectly consistent with an upward-sloping supply curve shifting to the right.
Yes, the law of supply is violated in this case - probably as a result of a change in technology, which always disrupts the law of supply.
QUESTION 4
Suppose a decrease in demand causes the equilibrium price of oil to fall from $80 to $50 per barrel. Which of the following are accurate descriptions of the consequence? (Pay attention to the terminology. 'Change in supply' does not mean the same thing as 'Change in quantity supplied.') Choose all that apply.
The supply of oil would decrease.
The supply curve would not shift.
The supply curve would shift to the left.
The quantity supplied would fall.
1 points
QUESTION 5
If the government offers solar panel producers a subsidy (the opposite of a tax), what will happen in the market for solar panels?
The supply curve will shift to the left, decreasing supply.
The supply curve will shift to the right, increasing supply.
The supply curve will shift to the left, increasing supply.
The supply curve will shift to the right, decreasing supply.
Explanation / Answer
(Question 3) Option (3)
When an upward rising supply curve shifts rightward, price falls and quantity rises.
(Question 4) Option (4)
When price falls (due to fall in demand), quantity supplied decreases.
(Question 5) Option (2)
A subsidy effectively lowers the cost, so firms increase supply. The supply curve shifts rightward, increasing supply.
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