【正文】 s supply curve to shift to the left. D. producer39。 1 五 Investment Tools: Economics: Microeconomic Analysis : Preliminary Reading: Supply, Demand, and the Market Process Question ID: 12637 The law of demand states that, given a decrease in: A. price, demand will decrease B. price, demand will increase. C. real output, demand will increase. D. real output, demand will decrease. B The 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 fo the use of the product. Question ID: 12638 The law of supply states that, given 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. B The law of supply states that, given an increase in price, supply will increase and vice versa. This relationship exists because higher prices induce current producers to produce more units and new producers to enter the market. Question ID: 12672 Given a shift to the right in the demand curve, which of the following identifies the shortrun response and longrun response of price relative to beginning price? 2 A. ShortRun Response of Price LongRun Response of Price Decreases modestly Decreases substantially B. ShortRun Response of Price LongRun Response of Price Increases substantially Increases modestly C. ShortRun Response of Price LongRun Response of Price Decreases substantially Decreases modestly D. ShortRun Response of Price LongRun Response of Price Increases modestly Increases substantially B Given 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 longrun), 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: 24810 Given that there is no shift in the supply or demand curve, what will bring the market into equilibrium if the supply 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. C Assuming that 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 product 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. 3 Question ID: 24808 Given that there is no shift in the supply or demand curves and the supply for a product is too high relative to demand, 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. B Given that there is no shift in the supply or demand curves, businesses 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 equilibrium. Question ID: 12676 Which 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. The price of the product decreases. D Changes 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: 12675 Which of the following is most relevant to a shift in the demand curve to the right? A. The price of the product decreases. 4 B. The price of substitute goods decreases. C. The cost of resources used to produce a product increases. D. Consumers39。s supply curve to shift to the right. C Producer’s set prices based on the cost of production. If some of the costs of production represent externalities imposed on other parties, the supply curve will be shifted to the left. The demand curve for the product will not necessarily be impacted by externalities from production. Question ID: 12710 Which of the following is an important factor that can limit the ability of the invisible hand to do its job? A. Market participants may change their tastes. B. New technologies emerge that can put people out of their jobs. C. Individuals demand public goods like clean air. D. Interest rates tend to rise during economic expansions. C The item listed that is an important factor that can limit the ability of the invisible hand to do its job is that pollution is a negative externality of the production processes. While clean air is a desirable goal for all, private markets cannot enforce penalties for pollution. Question ID: 24832 The principle that provides individuals with the incentive to engage in productive activities by pursuing their own interests is known as the A. free market principle. 16 B. petitive market principle. C. econo