Unit 2 : Reading Quiz # 5 : 6 points 1. With a down-sloping demand curve and an up-sloping supply curve for a product, a decrease in resource prices will:

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Unit 2 : Reading Quiz # 5 : 6 points 1. With a down-sloping demand curve and an up-sloping supply curve for a product, a decrease in resource prices will: A. increase equilibrium price and quantity. B. decrease equilibrium price and quantity. C. decrease equilibrium price and increase equilibrium quantity. D. increase equilibrium price and decrease equilibrium quantity. 2. Given a down-sloping demand curve and an up-sloping supply curve for a product, an increase in the price of a substitute good will: A. increase equilibrium price and quantity. B. decrease equilibrium price and quantity. C. increase equilibrium price and decrease equilibrium quantity. D. decrease equilibrium price and increase equilibrium quantity.

3. Over time, the equilibrium price of a gigabyte of computer memory has fallen while the equilibrium quantity purchased has increased. Based on this we can conclude that: A. Decreases in the demand for computer memory have exceeded increases in supply. B. Decreases in the supply of computer memory have exceeded increases in demand. C. Increases in the demand for computer memory have exceeded increases in supply. D. Increases in the supply of computer memory have exceeded increases in demand. 4. Suppose that in the clothing market, production costs have fallen, but the equilibrium price and quantity purchased have both increased. Based on this information we can conclude that: A. The supply of clothing has grown faster than the demand for clothing. B. Demand for clothing has grown faster than the supply of clothing. C. The supply of and demand for clothing have grown by the same proportion. D. There is no way to determine what has happened to supply and demand with this information.

5. A price floor means that: A. inflation is severe in this particular market. B. sellers are artificially restricting supply to raise price. C. government is imposing a maximum legal price that is typically below the equilibrium price. D. government is imposing a minimum legal price that is typically above the equilibrium price. 6. A price ceiling means that: A. there is currently a surplus of the relevant product. B. government is imposing a legal price that is typically below the equilibrium price. C. government wants to stop a deflationary spiral. D. government is imposing a legal price that is typically above the equilibrium price.