Economics

Time Spent: | 2 h , 30 min , 00 secs |

Points Received: | 62 / 100  (62%) |

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Question Type: | # Of Questions: | # Correct: |

Short | 10 | N/A |

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Grade Details |

 1. | Question : | (TCO A) There is an increase in the cost of materials for producing bicycles.

(4 pts.) What happens to bicycle supply?

(6 pts.) What happens to bicycle demand? |

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  | Student Answer: |   | Since the cost of producing bicycle will led to an increase in the price of production, the price of the bicycle will also increase. With price of the bicycle increased, the number of bicycle supplied will also increase. The supply surves slope upward. According to the law of demand, the consumers will buy more at lower prices and less at higher prices. With this inverse relationship between price and the quantity demanded will fall. The higher the price of bicycle due to the increase in cost of production and cost price of the bicycle, the lower the demand making the demand curve shifting to the left. |

  | Instructor Explanation: | Since a change in costs to produce the product is a supply factor, an increase in costs would be expected to decrease bicycle supply.  Remember that supply is a schedule of how many units suppliers are willing to offer at different prices.  When costs rise, the supply curve decreases or shifts to the left. 

Since changes in producer costs is not a demand factor, there would be no impact on demand.

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  | Points Received: | 7 of 10 |

  | Comments: | Since a change in costs to produce the product is a supply factor, an increase in costs would be expected to decrease bicycle supply. Remember that supply is a schedule of how many units suppliers are willing to offer at different prices. When costs rise, the supply curve decreases or shifts to the left. Since changes in producer costs is not a demand factor, there would be no impact on demand. |

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 2. | Question : | (TCO A)  Baseball gloves and baseballs are...