Increase in Supply and A Decrease in Demand - Economics Assignment Help

Assignment Task

1) In Utopia, resources can be used to produce guns or butter. If only guns are produced a total of 120 units of guns can be made. If only butter is produced, 60 units of butter can be produced. Assume that the opportunity cost of making guns is constant. In this case:

a. it will be inefficient to produce 90 units of guns and 15 units of butter

b. it will be infeasible to produce 90 units of guns and 15 units of butter.

c. it will be inefficient to produce 15 units of guns and 90 units of butter.

d. it will be infeasible to produce 15 units of guns and 90 units of butter. e. Both a and d are correct.

2) The demand for apples is given by q = 60 – 4p and supply is given by p = 5. At the market equilibrium own price elasticity of demand in absolute terms is equal to:

a. 0.5 and supply is perfectly elastic

b. 0.25 and supply is perfectly elastic

c. 0.5 and supply is perfectly inelastic

d. 4 and supply is perfectly inelastic e. none of the above

3) Assume that demand is downward sloping and supply is upward sloping. If there is an increase in supply and a decrease in demand:

a. price will increase and quantity will increase in equilibrium

b. price will decrease and quantity will increase in equilibrium

c. price will decrease and quantity will decrease in equilibrium

d. price will increase and quantity will decrease in equilibrium e. none of the above

4) Which of the following will result in an increase in demand

a. an increase in income for a normal good.

b. a increase in the price of a complementary good

c. a decrease in the price of a substitute good

d. an expectation that price will increase in the future e. both b and c are correct

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