ECONOMICS ASSIGNMENT 6 QUESTIONS AND ANSWERS
NB!!! Please carefully analyse the questions as they tend to slightly differ.
1. Lerato decided to start selling ginger beer on her street. The other kids in the
neighbourhood noticed that Lerato was making a lot of money selling ginger beer.
These kids decided to open their own ginger beer stands. When they opened their own
ginger beer stands, the equilibrium price decreased and the equilibrium quantity
increased.
TRUE
2. The Board of Private Schools offers numerous educational subsidies through grants
and low-cost equipment to private schools. They also provide a lot of incentives to
learners to attend private schools. Because of this, we expect that the equilibrium price
of attending a private school will go down and the equilibrium quantity of students will be
indeterminate.
FALSE
3. A severe drought in Ethiopia (one of the main coffee-producing countries) coincides
with a very successful marketing campaign for the beverage. The price of coffee will
either increase or decrease.
FALSE
4. A decrease in demand coupled with a decrease in supply would necessarily result in
a higher equilibrium price.
FALSE
5. The market for CDs is in equilibrium. Then an increase in the supply of CD players
leads to a decrease in the price of CD players and, simultaneously, a technological
innovation reduces the cost of manufacturing CDs. The equilibrium price of CDs will
increase and the equilibrium quantity of CDs will either increase, decrease, or stay the
same.
FALSE
, 6. If demand for a particular good increase at the same time that supply decreases, the
effect on equilibrium price will be ambiguous, but equilibrium quantity will increase.
FALSE
7. According to a leading commentator on the markets for laptops and tablets, the
demand for tablets has increased significantly over the past 5 years. But, over this same
time period, the price of a tablet has decreased sharply. A possible explanation for this
is that the increase in demand must have been accompanied by a decrease in supply.
FALSE
8. An increase in demand coupled with a decrease in supply would necessarily result in
a lower equilibrium price.
FALSE
9. When supply shifts right and demand shifts left, the equilibrium price always
increases.
FALSE
10. A decrease in demand coupled with a decrease in supply would necessarily result in
a lower equilibrium price.
FALSE
11. When the supply of coffee decreases and the demand for coffee increases due to
an increase in the preference for coffee, the price of coffee will decrease.
FALSE
12. Since one of the actors in a popular television series has been spotted wearing pink
sunglasses, pink sunglasses is a must for every fashion conscious person. At the same
time, a technological innovation reduces the costs of producing pink sunglasses. As a
result, the equilibrium price of pink sunglasses will either increase, decrease, or stay the
same, and the equilibrium quantity will increase.
TRUE
NB!!! Please carefully analyse the questions as they tend to slightly differ.
1. Lerato decided to start selling ginger beer on her street. The other kids in the
neighbourhood noticed that Lerato was making a lot of money selling ginger beer.
These kids decided to open their own ginger beer stands. When they opened their own
ginger beer stands, the equilibrium price decreased and the equilibrium quantity
increased.
TRUE
2. The Board of Private Schools offers numerous educational subsidies through grants
and low-cost equipment to private schools. They also provide a lot of incentives to
learners to attend private schools. Because of this, we expect that the equilibrium price
of attending a private school will go down and the equilibrium quantity of students will be
indeterminate.
FALSE
3. A severe drought in Ethiopia (one of the main coffee-producing countries) coincides
with a very successful marketing campaign for the beverage. The price of coffee will
either increase or decrease.
FALSE
4. A decrease in demand coupled with a decrease in supply would necessarily result in
a higher equilibrium price.
FALSE
5. The market for CDs is in equilibrium. Then an increase in the supply of CD players
leads to a decrease in the price of CD players and, simultaneously, a technological
innovation reduces the cost of manufacturing CDs. The equilibrium price of CDs will
increase and the equilibrium quantity of CDs will either increase, decrease, or stay the
same.
FALSE
, 6. If demand for a particular good increase at the same time that supply decreases, the
effect on equilibrium price will be ambiguous, but equilibrium quantity will increase.
FALSE
7. According to a leading commentator on the markets for laptops and tablets, the
demand for tablets has increased significantly over the past 5 years. But, over this same
time period, the price of a tablet has decreased sharply. A possible explanation for this
is that the increase in demand must have been accompanied by a decrease in supply.
FALSE
8. An increase in demand coupled with a decrease in supply would necessarily result in
a lower equilibrium price.
FALSE
9. When supply shifts right and demand shifts left, the equilibrium price always
increases.
FALSE
10. A decrease in demand coupled with a decrease in supply would necessarily result in
a lower equilibrium price.
FALSE
11. When the supply of coffee decreases and the demand for coffee increases due to
an increase in the preference for coffee, the price of coffee will decrease.
FALSE
12. Since one of the actors in a popular television series has been spotted wearing pink
sunglasses, pink sunglasses is a must for every fashion conscious person. At the same
time, a technological innovation reduces the costs of producing pink sunglasses. As a
result, the equilibrium price of pink sunglasses will either increase, decrease, or stay the
same, and the equilibrium quantity will increase.
TRUE
