Review - Unit 2.1 (Supply and Demand) - IBDP Economics HL

Imagine a supply function in the form Qs = c + dp that, when graphed, looks like the supply curve below. What are the values of c and d?

• c=4, d=2

• c=2, d=-4

• c=2, d=4

• c=-2, d=4

One day, the government decides to impose regulation to increase all wages in the country by 10%. What happens to the demand curve of the market for cars?

• It shifts inward (to the left)

• It remains the same

• It shifts outwards (to the right)

• There is movement along the curve such that the quantity demanded increases and the price decreases.

Which one of the following alternatives is an example of a market?

• All of the answers.

• The New York Stock Exchange.

• A website where freelancers can propose their services and companies can hire them.

• A place in your town where you can buy fruit.

Imagine a demand function in the form Qd = a - bP that, when graphed, looks like the demand curve below. What are the values of a and b?

• a=10, b=5

• a=10, b=-5

• a=5, b=2

• a=5, b=-2

Imagine a market for apples where the demand function is Qd = 50 - 3P and the supply function is Qs = -20 + 7P. What is the equilibrium price (Pe) of the market.

• 17.5

• 7

• 7.5

• 4.3

You are at your local fruit market with $5 in your pockets. The price of a kilogram of apples is the same as the price of a kilogram of oranges: both cost $5. You are hesitating between buying the apples or the oranges but finally decide to go for the apples. What is your opportunity cost?

• One kilogram of oranges.

• $5.

• One kilogram of apples.

• $5 and one kilogram of oranges.

If you are willing to pay $2,000 for a laptop with some specific performance level, but end up finding that exact laptop for $1,500 then how much is the consumer surplus you are enjoying.

• $0

• $500

• $1,500

• $2,000

You own a company producing toasters, and sell them for USD 50 each. You are not willing to sell at a price any lower than that. If one day there is a sudden increase in the demand for toasters such that the price increases to USD 75 per unit, how much producer surplus do you now enjoy?

• USD 75

• USD 50

• USD 25

• USD 0

Which of the following is true about allocative efficiency?

• Social welfare is maximized.

• Social marginal benefits equals social marginal cost.

• It happens only at market equilibrium where community surplus is maximized.

• All the choices given are valid.

What are the two functions of price?

• Reallocating and signalling

• Incentive and reallocating

• Reallocating and measuring

• Signalling and incentive