Although it is an imperfect model for describing a complex market, the

Question

Although it is an imperfect model for describing a complex market, the theory of supply and demand is a reasonably accurate method of explaining, describing, and predicting how the quantity and price of goods fluctuate within a market. Economists define supply as the amount of a particular good that producers are willing to sell at a certain price. For example, a manufacturer might be willing to sell 7,000 sprockets if each one sells for $0.45, but would be willing to sell substantially more sprockets, perhaps 12,000, for a higher price of $0.82. Conversely, demand represents the quantity of a given item that consumers will purchase at a set price; in the most efficient market, all buyers pay the lowest price available, and all sellers charge the highest price they are able. The intersection of these occurrences is graphically represented in supply and demand curves that show the prices at which a product becomes too expensive or too readily available.   1 
 1. Which one of the following best expresses the main idea of the passage?

A explaining why buyers in a given market tend to seek the lowest price on available goods
B offering a dissenting perspective on an obsolete economic model
C persuading readers that the model of supply and demand is the best method for understanding market forces
D providing an explanation of the two primary elements of an economic model and how they intersect
E analyzing the fluctuation of supply and demand within a market

2 
 2. If the producer of sprockets nearly doubles its prices as described in the passage, it follows that

A. buyers in the market will be likely to purchase more of the sprockets being sold.
B. the price of sprockets will continue to increase.
C. buyers in the market will be likely to purchase fewer of the sprockets being sold.

3 
  For example, a manufacturer might be willing to sell 7,000 sprockets if each one sells for $0.45 but would be willing to sell substantially more sprockets, perhaps 12,000, for a higher price of $0.82.  
 
 3. Select the sentence in the passage that illustrates an abstract concept presented by the author.

Vissamsetty · Answer

Got the first wrong, yup but thinking about that makes sense.

Sajjad1994 · Answer

OE

1. Which one of the following best expresses the main idea of the passage?

Explanation

The passage as a whole discusses the basic elements of the model of supply and demand, defining the two terms and describing how they work. That’s  choice (D).

Choice (A)  is too narrow, focusing on only one of the two forces described.

Choice (B)  is out of scope because there’s no mention of the model being obsolete; also, the author simply describes the model—she doesn’t dissent from its contentions.

Although the passage asserts that the supply and demand model is  “reasonably accurate,”  the passage is primarily concerned with explaining the model, not with persuading readers that it is the  “best”  model. Therefore, you can rule out  (C).

Although the theory of supply and demand does allow for the analysis of market forces,  (E) , the passage itself provides only description, not analysis.

Answer: D

Sajjad1994 · Answer

OE

2. If the producer of sprockets nearly doubles its prices as described in the passage, it follows that

You are told that producers want to charge as much as possible and buyers want to pay as little as possible, so it makes sense that as prices rise, demand falls,  choice (C) .

Choice (A)  is the opposite of what the passage implies, which is that demand decreases as prices rise.

There’s no evidence presented that this change in price will lead to further price increases, so you can rule out  (B) .

Answer: C

Sajjad1994 · Answer

OE

3. Select the sentence in the passage that illustrates an abstract concept presented by the author.

Explanation

The abstract concepts addressed in the passage are those of supply and demand, and the only example that illustrates supply and demand occurs in  sentence 3. Sentence 1  introduces the supply and demand model.  Sentence 2  defines the term supply. Sentence 4 explains demand, and  sentence 5  describes a graphical representation of the two forces.

Answer:    For example, a manufacturer might be willing to sell 7,000 sprockets if each one sells for $0.45 but would be willing to sell substantially more sprockets, perhaps 12,000, for a higher price of $0.82.

Although it is an imperfect model for describing a complex market, the

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