Grading Summary...quiz 1 - Grading Summary These are the...

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Grading Summary These are the automatically computed results of your exam. Grades for essay questions, and comments from your instructor, are in the "Details" section below. Date Taken: 9/11/2011 Time Spent: 2 h , 27 min , 54 secs Points Received: 92 / 100 (92%) Question Type: # Of Questions: # Correct: Short 10 N/A Grade Details 1. Question : (TCO A) There is a decrease in the cost of labor for producing bicycles. (4 pts.) What happens to bicycle supply? (6 pts.) What happens to bicycle demand? Student Answer: The supply of bicycles would be expected to decrease since it will cost the suppliers more to make the product. The demand for bicycles will remain the same since the change in labor costs is a supply factor and not a demand factor. Instructor Explanation: Since a change in costs to produce the product is a supply factor, a decrease in costs would be expected to increase bicycle supply. Remember that supply is a schedule of how many units suppliers are willing to offer at different prices. When costs fall, the supply curve increases or shifts to the right. Since changes in producer costs is not a demand factor, there would be no impact on demand. Points Received: 7 of 10 Comments: A change in COSTS is a SHIFT FACTOR for supply. The supply curve will definitely move to the right (increase in supply) in this case. Don't confuse price with cost, they are completely different things in economics. Lower costs for suppliers means they will be willing to supply more.
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(TCO A) Digital cameras and memory cards are complements in consumption. The price of digital cameras falls. (4 pts.) What happens to the demand for memory cards? (6 pts.) What happens to the demand for digital cameras? Student Answer: As the price of digital cameras falls the demand for memory cards would increase due to the fact that the demand for digital cameras would increase. This is due to the fact that they are compliments in consumption to consumers. This of course is based on the assumption that the price of memory cards does not change. The quantity demanded for digital cameras would increase, so there would be no effect on the demand. Instructor Explanation: When the price of a complimentary good falls, the demand for the other good rises. Price of digital cameras falls -- demand for memory cards rises. This tests your ability to distinguish between a change in demand and a change in quantity demanded. When the price of digital cameras falls THERE IS NO EFFECT ON THE DEMAND for digital cameras. Only the quantity demanded would change -- rise in this case. Remember that a change in demand means that THE WHOLE CURVE SHIFTS. Points Received: 10 of 10 Comments: 3. Question : SA 3. (TCO A) The number of wheat producers decreases. (4 pts.) What happens to the supply of wheat?
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This note was uploaded on 03/26/2012 for the course ECON GM545 taught by Professor Gotches during the Summer '11 term at Keller Graduate School of Management.

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Grading Summary...quiz 1 - Grading Summary These are the...

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