Which of the following factors is not a condition for a change in the supply of a commodity?
Improved technology
Cost of production
The price of the commodity
Government tax policies
Correct answer is C
Some of the factors that may cause a change in supply include; changes in the costs of production, improvements in technology, taxes, subsidies, weather conditions, health of livestock, and also by the price of other products.
The price of the commodity itself does not affect the change in supply, but rather it affects the change in the quantity supplied.
What effect will an increase in the supply of fish have on the meat market?
A fall in equilibrium price and quantity
An increase in equilibrium price and quantity
An increase in equilibrium price and a fall in quantity
Both equilibrium price and quantity will remain unchanged
Correct answer is D
If there is an increase in supply while the demand tends to remain the same, prices will most likely fall.
So an increase in the supply of fish in the market will only affect the demand and price of the fish as they may be more fish in the market than people who are willing and ready to buy the fish. This, however, will not affect the prices or the quantity demanded of meat.
The demand for coffee and tea is
Joint
Competitive
Composite
Derived
Correct answer is B
Competitive demand exists where a number of substitutes exist and one good can be purchased instead of another good. Tea and coffee are substitute goods, a consumer can either decide to consume tea or coffee. A fall or rise in the price of either of the two goods will lead to a fall or rise in the demand for its substitute.
If less of a good is bought as one's income increases, such a good is
A normal good
A luxury
A necessity
An inferior good
Correct answer is D
An inferior good is one whose demand drops when people's incomes rise.
If the demand function is Qd = -0.5 + 20, calculate the quantity demanded when price is $15.0
-%27.50
-%12.50
$12.50
-$27.50
Correct answer is C
When price is 15.0, quantity demanded =
Qd = -0.5(15.0)+ 20
Qd = -7.5 + 20 = $12.5