Quiz 31. Refer to graph 1. A decrease in demand & an increase in supply will always result in a lower equilibrium quantity.- False2. Refer to graph 1. Higher costs of inputs may have caused the shift of the S curve.- False3. Refer to graph 1. An increase in the price of a complementary good may have caused the shift of the D curve.- True4. Refer to graph 1. If the shift of the D curve was due to a weak economy in lower incomes for buyers, then the good in this graph would be an inferior good.- False5. Refer to graph A. Which of the following statements about the market for pizzas is false?- In a free & competitive market, the prize of the pizza would be 3$- At the market equilibrium, the opportunity cost to produce the last unit of pizza was 3$- If the price of pizzas were 3$, buyers with a reservation price higher than 3$ would not buy pizzas- If the price of pizzas were 3$, sellers with a reservation price higher than 3$ would not produce & sell pizzas6. Refer to graph A. If the authorities were to establish a price floor,- the price of pizzas would be higher than 3$- the price of pizzas would be lower than 3$- the quantity of pizzas bought would be more than 12, 000 slices/day- there will be a shortage of pizzas7. The downward-sloping D curve - reflects increasing reservation prices of buyers- is explained by the substitution & real income effects- is due to the decreasing opportunity costs in producing higher quantities of pizzas- is caused by increasing quantities of pizzas supplied by sellers in the market8. A buyer allocated a budget of 100$ for his weekly supermarket expenditure. Lettuce was much cheaper than broccoli, so he bought more lettuce & less broccoli. This scenario best reflects- the substitution effect in action- an increase in the buyer’s reservation price for lettuce- the income effect in action- a drop in the buyer’s reservation price for broccoli9. Which of the following statements about price controls is untrue?- Rent controls is an example of a price ceiling- A price ceiling typically will result in shortages or excess demand in a market- A price floor is set at a level above the market equilibrium price- A minimum wage would be an example of a price ceiling in the labour market10. Which statement about a market demand curve is true?- The curve represents the reservation prices of buyers of the good in a market- The curve shows a direct relationship between price & quantity, ceteris paribus- The curve reflects the opportunity cost of producing the good- The curve shows the interaction of buyers & sellers of a good in the