1. A firm produces plastic toys and plastic medical devices. What happens to the supply of toys if the market price of medical devices increases?
a. The opportunity cost of producing toys rises, so the supply curve of toys increases.
b. The opportunity cost of producing toys rises, so the supply curve of toys decreases.
c. The opportunity cost of producing toys falls, so the supply curve of toys increases.
d. The opportunity cost of producing toys falls, so the supply curve of toys decreases.
2. If demand for a product increases and supply of the product decreases at the same time,
a. Price will rise and quantity will fall.
b. Price will fall and quantity will rise.
c. Price will rise and the change in quantity is ambiguous.
d. Price will fall and the change in quantity is ambiguous.