Week 4 Quiz

In the course's illustrative market, supply follows Qs = 10P − 30, with P in dollars and Qs in units per day. What is quantity supplied at a price of 7 dollars?

Select one.

• 20 units per day
• 40 units per day
• 70 units per day
• 30 units per day

In the course's illustrative market, demand follows Qd = 90 − 10P and supply follows Qs = 10P − 30, with P in dollars and quantities in units per day. Setting Qd = Qs, where does this market settle?

Select one.

• At 4 dollars, with 50 units per day bought and sold
• At 7 dollars, with 40 units per day bought and sold
• At 6 dollars, with 30 units per day bought and sold
• At 3 dollars, with 0 units per day bought and sold

In the course's illustrative market, demand follows Qd = 90 − 10P and supply follows Qs = 10P − 30, with P in dollars and quantities in units per day. If the price were 8 dollars, what would the market show?

Select one.

• A surplus of 40 units per day, which pushes the price down
• A shortage of 40 units per day, which pushes the price up
• A surplus of 10 units per day, which pushes the price down
• No gap at all, because sellers sell everything they offer

In the course's illustrative market, demand follows Qd = 90 − 10P and supply follows Qs = 10P − 30, with P in dollars and quantities in units per day. A new technology lets every seller offer 20 more units at every price, so supply becomes Qs = 10P − 10, and demand does not change. Which statement describes the new equilibrium?

Select one.

• Supply shifts left; the price falls to 5 dollars and the quantity falls to 20 units per day
• Demand shifts right; the price rises to 7 dollars and the quantity rises to 40 units per day
• Supply shifts right; the price rises to 7 dollars and the quantity rises to 40 units per day
• Supply shifts right; the price falls to 5 dollars and the quantity rises to 40 units per day

When the price of a key input used to make a good rises, the demand curve for that good shifts left.

True or false.

• True
• False

In the course's illustrative market, demand follows Qd = 90 − 10P and supply follows Qs = 10P − 30, with P in dollars and quantities in units per day. The price of an input rises, and sellers offer 20 fewer units at every price, so supply becomes Qs = 10P − 50; demand does not change. Which statement describes the new equilibrium?

Select one.

• Demand shifts left; the price falls to 5 dollars and the quantity falls to 20 units per day
• Supply shifts left; the price rises to 7 dollars and the quantity falls to 20 units per day
• Supply shifts left; the price falls to 5 dollars and the quantity falls to 20 units per day
• Supply shifts right; the price rises to 7 dollars and the quantity rises to 40 units per day

In the course's illustrative market, which of these changes would shift the supply curve itself, rather than move sellers along it? Select every change that shifts supply.

Select every option that applies.

• The price of an input used to make the good rises
• A new technology lowers the cost of making each unit
• Several new sellers enter the market
• The good's own price rises from 6 to 7 dollars
• Buyers' incomes rise, and the good is a normal good

In the course's illustrative market, demand follows Qd = 90 − 10P and supply follows Qs = 10P − 30, with P in dollars and quantities in units per day. Demand rises to Qd = 110 − 10P and supply rises to Qs = 10P − 10 at the same time, each by 20 units at every price. Which statement is accurate?

Select one.

• Both curves moved right, so the price and the quantity must both rise in every case like this
• Supply rose, so the price must fall while the quantity stays where it was
• Quantity rises to 50 for certain, and the price is unchanged only because the two shifts are the same size
• The price must rise because demand rose, while the change in quantity cannot be signed

Which of these statements about the course's illustrative market is a normative statement?

Select one.

• The market's equilibrium price is too high for buyers and ought to be lowered.
• Each 1-dollar rise in the price raises quantity supplied by 10 units.
• At 4 dollars, buyers want more units than sellers offer.
• If sellers expect the price to rise soon, they offer fewer units today.

The law of supply is a positive statement: holding every other influence fixed, it predicts how quantity supplied responds to a change in price, and evidence can test it.

True or false.

• True
• False