Question

Which chain of events occurs in the correct order?

Select one:

A. Demand decreases, price decreases, quantity supplied decreases.

B. Supply decreases, price increases, quantity demanded decreases.

C. Supply increases, price decreases, quantity demanded increases.

D. Any of the above could be correct.

E. A and B, only

Question text

In general, an advance in production technology will

(x) increase a firm’s costs.

(y) allow firms to raise the price of their product.

(z) shift the supply curve to the right.

Select one:

A. (x), (y) and (z)

B. (x) and (y) only

C. (x) and (z) only

D. (y) and (z) only

E. (z) only

Question text

If Wilma can produce cookies at a lower opportunity cost than Barney, then it is obvious that

Select one:

A. Wilma has both an absolute and comparative advantage in the production of cookies.

B. Barney has a comparative advantage in the production of cookies.

C. Wilma has a comparative advantage in the production of cookies.

D. Barney has an absolute advantage in the production of cookies.

E. Wilma has an absolute advantage and is capable of producing more cookies than Barney.

Answer 1

Answer 1. d) Any one of the above could be correct.

In Option 1, demand decreases, price decreases and quantity supplied decreases. The last step would again result in an increase in prices.

Similarly in option 2, supply decreases, price increases, quantity demanded decreases.

The deceased demand would again cause the price to decrease.

Option 3 also could be correct. Here, supply increases, price decreases, quantity demanded increases, which now causes price to increase.

Hence after analysing all the given options, it can be seen that any one of them could be correct.