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Supply And Demand Practice Problems Worksheet With Answers - Instructor Miller - Des Moines Area Community College Page 4

16. If the demand for letters written by Abraham Lincoln is higher than the demand for letters

written by John Wilkes Booth, what would have to be true for the market equilibrium prices for

these letters to be equal?

A) The supply of Lincoln letters would have to be less than the supply of Booth letters.

B) The supply of Booth letters would have to be less than the supply of Lincoln letters.

C) The supply of Lincoln letters and the supply of Booth letters would have to be equal.

D) If the demand for Lincoln letters is greater than the demand for Booth letters, the market

equilibrium price for Lincoln letters will always be greater than the market equilibrium price for

Booth letters.

17. Let D = demand, S = supply, P = equilibrium price, Q = equilibrium quantity. What happens

in the market for solar panels if the government offers tax breaks to encourage manufacturers to

produce more solar panels?

A) S increases, D no change, P and Q increase

B) S increases, D no change, P decreases, Q increases

C) D and S increase, P and Q decrease

D) D no change, S increases, P decreases, Q decreases

18. Electric car enthusiasts want to buy more electric cars at a lower price. All of the following

events would have this effect except

A) technological advancement in the production of electric car batteries.

B) an increase in the number of manufacturers of electric cars.

C) a decrease in the price of lithium, which is used in the electric car batteries.

D) an increase in the price of gasoline.

19. Which of the following would cause both the equilibrium price and equilibrium quantity of

barley (assume that barley is an inferior good) to increase?

A) an increase in consumer income

B) a drought that sharply reduces barley output

C) a decrease in consumer income

D) unusually good weather that results in a bumper crop of barley

20. Which of the following would cause the equilibrium price of ketchup to increase and the

equilibrium quantity of ketchup to decrease?

A) a decrease in the price of tomatoes

B) an increase in the price of tomatoes

C) an increase in the price of mustard, a substitute for ketchup

D) an increase in the price of french fries, a complement for ketchup

Supply And Demand Practice Problems Worksheet With Answers - Instructor Miller - Des Moines Area Community College Page 4