Exhibit 4-2 Supply and demand curves
In Exhibit 4-2, which of the following might cause a shift from S1 to S2?
A. A decrease in input prices.
B. A decrease in consumer prices.
C. An increase in input prices.
D. An increase in consumer income.
Answer: A
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This year a new oil field with substantial reserves has been discovered. Such discoveries are not made every year. Therefore an increase in the demand for oil will:
A) increase the long-run price of oil more than the short-run price of oil. B) increase the long-run price of oil less than the short-run price of oil. C) ensure the long-run price of oil and short-run price of oil increase by the same amount. D) ensure that the short-run price of oil falls. E) ensure that the short-run price of oil remains unchanged.
In graphical form,the effect of imposing a tax on a good is shown as
A) a leftward shift of the market supply curve. B) a rightward shift of the market supply curve. C) a downward movement along the market supply curve. D) no change to the market supply curve.