MICROECONOMICS MICROECONOMICS (25 points) T. Labay XXXXXXXXXXName _________________________ Quiz No.2 XXXXXXXXXXTime__________________________ (2pts XXXXXXXXXXDefine: demand XXXXXXXXXXsupply. (2 pts...

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MICROECONOMICS MICROECONOMICS (25 points) T. Labay Name _________________________ Quiz No.2 Time__________________________ (2pts.) 1. Define: demand supply. (2 pts.) 2. The forces of demand and supply interact in the marketplace to determine two items. Name them. (4 pts.) 3. In class, we discussed different elements or non-price factors that determine both demand and supply. a. Name two elements that determine demand. b. Name two elements that determine supply. (12 pts.) 4. Answer the following questions by filling in the blanks as it relates to the different changes in demand and supply (drawing a graph with the necessary changes in demand and supply will help you answer the questions). a. An individual receives a salary increase. 1. This element is a change in ______________________. 2. Which way will the graph shift? _______________________. 3. This change will result in a(n)_________________ in price and a(n) _____________________ in quantity. b. A company’s cost of production increased. 1. This element is a change in ______________________. 2. Which way will the graph shift? __________________. 3. This change will result in a(n) _________________ in price and a(n) _______________ in quantity. c. There is an increase in price of a substitute good for orange juice and a frost in Florida destroyed a large amount of the citrus product. 1. This will cause a(n) __________________ in demand and a(n) ________________ in supply. 2. The new equilibrium price will ___________________. 4. The old equilibrium price will now be a ___________________. (4 pts.) 5. List the two things that will happen when:. a. The price of wheat is below the equilibrium price? b. The price of wheat is above the equilibrium price? (1 pt.) 6. Hot dogs and hot dog buns are an example of what type of good? (2 pts.) Extra credit: Law of demand says as price increases demand decreases and vica versa. Why is this statement false?