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1、1五 Investment Tools: Economics: Microeconomic Analysis1.A: Preliminary Reading: Supply, Demand, and the Market ProcessQuestion ID: 12637The law of demand states that, given a decrease in:A. price, demand will decreaseB. price, demand will increase.C. real output, demand will increase.D. real output,
2、 demand will decrease. BThe law of demand states that, given an increase in price, demand will decrease. This relationship exists because higher prices induce some consumers to purchase substitute goods and/or simply forgo the use of the product.Question ID: 12638The law of supply states that, given
3、 a decrease in:A. price, supply will increase.B. price, supply will decrease.C. real output, supply will increase.D. real output, supply will decrease. BThe law of supply states that, given an increase in price, supply will increase and vice versa. This relationship exists because higher prices indu
4、ce current producers to produce more units and new producers to enter the market.Question ID: 12672Given a shift to the right in the demand curve, which of the following identifies the short-run response and long-run response of price relative to beginning price?A.Short-Run Response of Price Long-Ru
5、n Response of PriceDecreases modestly Decreases substantiallyB.Short-Run Response of Price Long-Run Response of PriceIncreases substantially Increases modestly2C.Short-Run Response of Price Long-Run Response of PriceDecreases substantially Decreases modestlyD.Short-Run Response of Price Long-Run Res
6、ponse of PriceIncreases modestly Increases substantiallyBGiven a shift to the right in the demand curve, the price will rise substantially in the short run because there is a limit to how much production can be increased in the short run. However, after more plant and equipment are added (in the lon
7、g-run), production can be increased significantly which reduces the imbalance between demand and supply. The result is a decline in the price from the initial high level.Question ID: 24810Given that there is no shift in the supply or demand curve, what will bring the market into equilibrium if the s
8、upply for a product exceeds demand? Price will:A. increase, demand will increase, and supply will decrease.B. decrease, demand will decrease, and supply will decrease.C. decrease, demand will increase and supply will decrease.D. increase, demand will decrease, and supply will increase.CAssuming that
9、 there is no shift in the supply or demand curve and supply for a product is too high relative to demand, price must decrease to bring the market into equilibrium. The lower price of the product will increase demand by consumers for the product while discouraging producers to produce more of the pro
10、duct at the lower price. This will in turn reduce the quantity of goods that will be supplied, because fewer producers are willing to supply goods at the lower price.Question ID: 24808Given that there is no shift in the supply or demand curves and the supply for a product is too high relative to dem
11、and, which course of action will firms most likely take? Firms will:A. increase prices to increase inventory.B. reduce prices on their excess inventory.C. increase capacity to increase production.D. reduce production to increase prices.3BGiven that there is no shift in the supply or demand curves, b
12、usinesses will either decrease the amount of production or reduce prices in order to reduce the amount of excess inventory they are holding. Increasing capacity for production or increasing prices would result in increasing the amount of excess inventory and bring the market further away from equili
13、brium.Question ID: 12676Which of the following is not relevant to a shift in the supply curve to the left?A. Some of the producers have shut down their operations.B. An environmental tax has been imposed on the production process.C. The industry is experiencing increased product liability claims.D.
14、The price of the product decreases. DChanges in price will enable movements along the supply curve and will not cause it to shift. Other factors will result in a shift in the supply curve to the left.Question ID: 12675Which of the following is most relevant to a shift in the demand curve to the righ
15、t?A. The price of the product decreases.B. The price of substitute goods decreases.C. The cost of resources used to produce a product increases.D. Consumers income increases. DAn increase in consumers incomes will make it possible for consumers to be willing to pay higher prices for the same quantit
16、y. Higher prices will also lead to an increase in supply.Question ID: 24815Which of the following will cause a demand curve to shift?A. A new technology innovation related to the production of the product.B. An unexpected political change.C. A reduced price of resources used in the production of the product. 4D. An increased number of consumers in the target market for the product.DAn increased number of consumers in the target market for the product will increase the demand for
