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Unit 2. Supply and demand
Quiz
1. A successful government TV advertisement campaign has
achieved its goal to show that eating oatmeal reduces the risk of colon
cancer. We should observe that
A. the price of oatmeal falls;
B. the price of oatmeal rises;
C. the equilibrium quantity of oatmeal falls;
D. the supply of oatmeal falls;
E. the demand for oatmeal falls.
The answer is B. Demand curve for oatmeal is going to shift
outwards.
2. The demand curve for a good shows, for each quantity level, the
buyers’
A. target price;
B. minimum acceptable price;
C. maximum acceptable price;
D. average willingness to pay;
E. none of the above.
The answer is С. Buyers would be happy to pay a lower price,
but they will not pay a higher price for each quantity of the good.
3. If a unique Picasso painting is offered for sale at an auction,
which, if any, of the following correctly shows the supply curve for the
painting?
A. a vertical line;
B. a horizontal line;
C. a 45 degree line (a line that goes through the origin so that the
angle between the line and either axis is 45 degrees);
D. a downward-sloping line;
E. it is impossible to determine the shape of the supply curve
from the given information.
The answer is A. There is just one painting, and the quantity
supplied is independent of the price.
