Number of Pages: 4 including this cover page Student name: Instructions: • Students are required to answer all of the following questions. • Students are expected to refer to the course materials and use examples from the course and from their own experience in their answers where needed. • Simple calculators are allowed. Question One 1. A student claims to have spotted a UFO over the desert outside of Dubai. How will his claim affect the supply (not the quantity supplied) of binoculars in Dubai stores? 2. If we have an inferior good, explain the impact of the decrease in consumer’s income on the demand of that good. 3. How would each of the following affect the market supply curve for corn? a. A new and improved crop rotation technique is discovered. b. The price of fertilizer increases 4. Explain the impact of each of the following factors on the demand and/or supply curves of CD players. Draw the necessary curves for each part. a. The price of flash drives increased. b. The price of CDs decreased. c. New tax imposed on CD players producers. d. The price of CD players decreases 5. Sarah was the business manager for an Ice Cream firm earning an annual salary of $40,000. Then Sarah decided to become a business advisor. Sarah hired an administrative assistant at $15,000 per year and rents workspace Page 1 of 4 Fall 2022-2023 (utilities included) for $3,000 per month. Sarah earned $100,000 in total revenue the first year. a. Refer to the information above. What is the accounting profit for Sarah? b. Refer to the information above. What is the economic profit for Sarah? 6. Suppose demand and supply are given by Qd = 10 – 2P and Qs =2 2P a. What are the equilibrium quantity and price in this market and draw a diagram to show the equilibrium price and quantity? 7.Demand for coffee last Monday is shown in bold [labeled D(Monday)]. Refer to the figure above. On Tuesday the news featured a story that a storm wiped out the entire coffee crop in Brazil. On Wednesday, what will happen to the demand curve of coffee? Would it shift to the left D(A) or to the right D(B)? Explain why? Question Two: Select the correct answer 1.The diagram below shows the Jordan market for olive oil. Which of the following events might have caused the shift in the supply curve? Select the one correct answer and explain why. Write your answer in the answer book (6 points) Page 2 of 4 Fall 2022-2023 (1) Improved pesticides enhance crop yield. (2) A cut in the price of vegetable oil. (3) An increase in the income of consumers. (4) A severe drought in Jordan. 2.The quantity that sellers wish to sell tends to ______ as price increases, and so the supply curve is ______ sloping. A) increase; downward B) decrease; downward C) increase; upward D) decrease; upward 3.Which of following is not true of the factors impact on demand curve? A) Consumer income. B) Prices of complements goods. C) Input prices and cost of production. D) Prices of substitutes goods. 4.Let’s say that as the price of apples continues to grow, more and more people decide to consume bananas instead apples. This is referred to: A) The normal effect of a price change. B) The income effect of a price change. C) The substitution effect of a price change. D) A decrease in the demand for Apple. 5.Suppose that when the price of Apple is $6 per pound, buyers wish to buy 700 pounds per day and sellers wish to sell 900 pounds per day. In this case A) Excess supply will lead the price of Apple to fall. B) Excess demand will lead the price of Apple to fall. C) Excess supply will lead the price of Apple to rise. D) Excess demand will lead the price of Apple to rise. 6.If there is an excess supply of Automobile, then A) Quantity supplied is greater than quantity demanded. B) Supply is greater than demand. C) Demand is greater than supply. D) Quantity demanded is greater than quantity supplied. 7.Normally the demand curve will have a _______________ shape. Draw the curve. Page 3 of 4 Fall 2022-2023 A) Positive sloping B) Negative sloping C) Vertical D) Horizontal 8.Which of following is not true of the equilibrium price? A) It is fair in the sense that everyone can afford basic goods and services. B) It measures the value of the last unit sold to consumers. C) Buyers who are willing to pay the equilibrium price can acquire the good. D) Sellers who are willing to accept the equilibrium price can sell what they produce. 9.A decrease in both the equilibrium price and the equilibrium quantity of Coffee is best explained by: A) An increase in the demand for Coffee. B) An increase in the supply of Coffee. C) A decrease in the supply of Coffee. D) A decrease in the demand for Coffee. 10.What will happen to the equilibrium price and quantity of oranges if a study finds that a daily glass of orange juice reduces the risk of heart disease? A) Equilibrium price will decrease, and equilibrium quantity will increase. B) Equilibrium price will increase, and equilibrium quantity will decrease. C) Both equilibrium price and equilibrium quantity will decrease. D) Both equilibrium price and equilibrium quantity will increase. END OF THE QUESTIONS Page 4 of 4 Fall 2022-2023