Glossary
Knowledge Check - Scenario 5
For the following scenario in the soft drinks market, answer the related question using the graphs below.
Scenario 5: Recent economic data show that incomes in America are rising.
1. Based on Scenario 5, which graph illustrates the change in the soft drinks
market?
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A. Graph 1 |
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B. Graph 2 |
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C. Graph 3 |
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D. Graph 4 |
That's incorrect. The demand for soft drinks would increase if incomes rise.
The answer is Graph 1.
That's correct. The demand for soft drinks would increase if incomes rise.
2. Based on Scenario 5, the supply curve for soft drinks
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A. shifts to the right. |
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B. shifts to the left. |
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C. does not shift. |
That's incorrect. Rising incomes would affect the demand curve for soft drinks,
not the supply curve. The supply curve does not shift.
That's correct. Rising incomes would affect the demand curve for soft drinks,
not the supply curve.
3. Based on Scenario 5, the demand curve for soft drinks
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A. shifts to the right. |
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B. shifts to the left. |
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C. does not shift. |
That's incorrect. Rising incomes would shift the demand curve for soft drinks
to the right.
That's correct. Rising incomes would shift the demand curve for soft drinks
to the right.
4. Based on Scenario 5, the equilibrium price of soft drinks
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A. increases. |
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B. decreases. |
That's incorrect. An increase in the demand for soft drinks would increase
the equilibrium price of soft drinks.
That's correct. An increase in the demand for soft drinks would increase
the equilibrium price of soft drinks.
5. Based on Scenario 5, the equilibrium quantity of soft drinks
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A. increases. |
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B. decreases. |
That's incorrect. An increase in the demand for soft drinks would increase
the equilibrium quantity of soft drinks.
That's correct. An increase in the demand for soft drinks would increase
the equilibrium quantity of soft drinks.