QUESTION 1
A cold spell in Florida extensively reduced the orange crop, and as a result, California oranges commanded a higher price. Which of the following statements best explains the situation?
The supply of Florida oranges fell, causing the supply of California oranges to increase as well as their price.
The supply of Florida oranges fell, causing the supply of California oranges to decrease and their price to increase.
The supply of Florida oranges fell, causing their price to increase and the demand for California oranges to increase.
The demand for Florida oranges was reduced by the freeze, causing an increase in the price of California oranges and a greater demand for them.
QUESTION 2
"A reduction in gasoline prices caused the demand for gasoline to increase. The lower gas prices also led to an increase in demand for large cars, causing their prices to rise." These
statements
are essentially correct.
contain one error; the lower gasoline prices would cause an increase in the quantity demanded of gasoline, not an increase in demand.
contain one error; the lower gasoline prices would increase the quantity demanded of large cars, not the demand.
contain two errors; the lower gasoline prices would cause the quantity of gasoline demanded (rather than the demand) to increase, and the lower gasoline price would cause an increase in quantity
demanded (rather than the demand) for large cars.
