1. A ) A shortage of 500 units exists when P = $4.
EQ #9
AGEC (4 pts) October 20, 2010
Given the following graph, which of the following statements are true? (2pts)
A ) A shortage of 500 units exists when P = $4.
B) The market clearing price is $3, and the market
quantity is 800.
C) A surplus of 500 units exists when P = $4.
D) A surplus of 300 units exists when P = $4. D
1100 S
800 $4 $3
600 P Q
2. The graph depicts a rightward shift in the supply curve.
i) Which of the following statement is true? (1pt)
This diagram could describe the impact of a bumper crop due to excellent weather conditions in a particular region.
(b) This diagram could describe the impact of an unexpected freeze on the citrus industry in Florida.
(c) This diagram could describe the economic effects of biotechnology, where the marginal costs of production fall by 5%.
(d) (a) and (c)
ii) The net effect on society is given by: (1pt)
(a) - B-C (b) C + E (c) -C – E (d) B – E