Deck 3: Demand and Supply

Question 1

When economists study the behavior of buyers, they are studying:

A) supply.
B) the role of government.
C) demand.
D) psychology.

Answer 1

demand.

Question 2

Which of the following most correctly states the law of demand?

A) As the price falls all other things unchanged, demand will go up.
B) As the price goes up, all other things unchanged, demand will go down.
C) As the price falls, all other things unchanged, the quantity demanded will go down.
D) As the price falls, all other things unchanged, the quantity demanded will increase.

Answer 2

As the price falls, all other things unchanged, the quantity demanded will increase.

Question 3

The Demand for Chocolate-Covered Peanuts
Quantity Demanded
(bags per month)

(Exhibit: The Demand for Chocolate-Covered Peanuts) If the price of chocolate-covered peanuts increases from 40 cents to 50 cents, Dan will reduce his quantity demanded from 160 bags to 140 bags due to:

A) the law of demand.
B) the law of supply.
C) a decline in his income.
D) a change in his tastes and preferences.

Answer 3

the law of demand.

Question 4

The Demand for Chocolate-Covered Peanuts
Quantity Demanded
(bags per month)

(Exhibit: The Demand for Chocolate-Covered Peanuts) If George, Barbara, and Dan are the only three buyers in the market, and the price of a bag of chocolate-covered peanuts is 50 cents, the total market demand is ________ bags per month.

A) 80
B) 105
C) 210
D) 280

Question 5

The law of demand implies that:

A) consumers are not responsive to price changes.
B) consumers will, all other things unchanged, buy more at lower prices.
C) sellers will, all other things unchanged, offer more on the market at higher prices.
D) sellers will, all other things unchanged, offer less on the market at lower prices.

Question 6

If the price of a commodity increases, all of the things unchanged, you would expect the:

A) demand to decrease.
B) quantity demanded to increase.
C) quantity demanded to decrease.
D) demand curve to shift to the left.

Question 7

The Demand for Chocolate-Covered Peanuts
Quantity Demanded
(bags per month)

(Exhibit: The Demand for Chocolate-Covered Peanuts) If George is only able to purchase 30 bags of chocolate-covered peanuts, the maximum price he is willing and able to pay for each bag is ________ cents.

A) 80
B) 70
C) 60
D) 50

Question 8

The Demand for Chocolate-Covered Peanuts
Quantity Demanded
(bags per month)

(Exhibit: The Demand for Chocolate-Covered Peanuts) If Barbara is only able to purchase 20 bags of chocolate-covered peanuts, the maximum price she is willing and able to pay for each bag is ________ cents.

A) 90
B) 80
C) 70
D) 60

Question 9

Demand is defined as:

A) an amount that is purchased at a specific price, given supply.
B) a schedule that establishes the price of a good.
C) a schedule that shows how much will be purchased at various prices during a particular period, all other things unchanged.
D) the amount that will be bought at a specific price.

Question 10

Demand is best defined as the:

A) amount of a commodity that buyers would be willing and able to purchase at a specific price.
B) price that buyers would be willing and able to pay for a specific quantity of a good.
C) relationship between the price of a good and the quantity people are able to purchase, all other things unchanged.
D) relationship between the price of a good and the quantity people are willing and able to purchase, all other things unchanged.

Question 11

The principle stating that, for virtually all goods and services, there is a negative relationship between price and quantity demanded, all other things unchanged, is the law of:

A) supply.
B) demand.
C) scarcity.
D) increasing opportunity costs.

Question 12

The Demand for Chocolate-Covered Peanuts
Quantity Demanded
(bags per month)

(Exhibit: The Demand for Chocolate-Covered Peanuts) If the price of chocolate-covered peanuts is 60 cents, the quantity demanded by George is ________ bags per month.

A) 10
B) 15
C) 20
D) 25

Question 13

The relationship between the price of a good and the quantity people are willing and able to purchase is:

A) supply.
B) demand.
C) equilibrium.
D) disequilibrium.

Question 14

A decrease in the price of eggs, all other things unchanged, will result in a(n):

A) increase in the demand for eggs.
B) increase in the supply of eggs.
C) greater quantity of eggs supplied.
D) greater quantity of eggs demanded.

Question 15

The Demand for Chocolate-Covered Peanuts
Quantity Demanded
(bags per month)

(Exhibit: The Demand for Chocolate-Covered Peanuts) If George, Barbara, and Dan are the only three buyers in the market, and the price of a bag of chocolate-covered peanuts is 80 cents, the total market demand is ________ bags per month.

A) 70
B) 80
C) 105
D) 280

Question 16

The law of demand is illustrated by a demand curve that is:

A) horizontal.
B) downward-sloping.
C) vertical.
D) upward-sloping.

Question 17

The law of demand is illustrated when:

A) an increase in tuition encourages more students to enroll in college because the quality of education has risen.
B) an increase in the purchases of personal computers results from lower prices.
C) higher oil prices cause oil companies to drill for new sources of oil.
D) higher fees for the use of public golf courses force golfers to purchase fewer golf balls.

Question 18

A negative relationship between the quantity demanded and price is called the law of ______.

A) demand
B) diminishing marginal returns
C) market clearing
D) supply

Question 19

A decrease in the price of a good will, all other things unchanged, result in:

A) an increase in demand.
B) an increase in supply.
C) an increase in the quantity demanded.
D) more being supplied.

Question 20

The demand curve for on-demand videos has shifted to the right. What could have caused it?

A) A fall in the price of on-demand videos.
B) An increase in the price of on-demand videos.
C) An increase in the supply of on-demand videos.
D) An increase in the income of buyers.

Question 21

If steak and potatoes are complements, when the price of steak goes up, the demand curve for potatoes:

A) shifts to the right.
B) shifts to the left.
C) stays the same.
D) shifts to the right and then moves back.

Question 22

If the price of hamburger increases, it would probably result in ________ in the demand for hamburger buns.

A) a decrease
B) an increase
C) no change
D) random fluctuations

Question 23

(Exhibit: The Demand for music downloads) A decrease in the price of CDs (a substitute) would result in a change illustrated by:

A) the move from f to g in Figure (a).
B) the move from h to i in Figure (b).
C) the move from j to k in Figure (c).
D) the move from l to m in Figure (d).

Question 24

The primary difference between a change in demand and a change in the quantity demanded is:

A) a change in demand is a movement along the demand curve, and a change in quantity demanded is a shift in the demand curve.
B) a change in quantity demanded is a movement along the demand curve, and a change in demand is a shift in the demand curve.
C) both a change in quantity demanded and a change in demand are shifts in the demand curve, only in different directions.
D) both a change in quantity demanded and a change in demand are movements along the demand curve, only in different directions.

Question 25

A decrease in the demand for eggs caused by concerns over cholesterol is most likely attributable to which demand shifter?

A) income
B) prices
C) consumer preferences
D) prices of other goods

Question 26

(Exhibit: The Demand for music downloads) A decrease in the fee charged for music downloads would result in a change illustrated by:

A) the move from f to g in Figure (a).
B) the move from h to i in Figure (b).
C) the move from j to k in Figure (c).
D) the move from l to m in Figure (d).

Question 27

When the price of gas goes up and the demand for tires goes down, this means tires and gas are:

A) substitutes.
B) complements.
C) both expensive.
D) both inexpensive.

Question 28

Consumer preferences, prices of related goods, income, and demographic characteristics are often termed:

A) market technologies.
B) demand prices.
C) demand shifters.
D) supply determinants.

Question 29

For most consumers, blu-ray players and blu-ray discs are likely to be:

A) substitute goods.
B) complementary goods.
C) inferior goods.
D) independent goods.

Question 30

Two goods are substitutes if:

A) an increase in the price of one leads to a shift to the left in the demand curve for the other.
B) an increase in the price of one leads to an increase in demand for the other.
C) an increase in the price of one will increase the supply of the other.
D) a fall in the price of one leads to a reduction in supply for the other.

Question 31

An announcement that smoking will harm your ability to think clearly will most likely result in:

A) an increase in the quantity of cigarettes demanded.
B) a decrease in the demand for cigarettes.
C) no change in smoking habits.
D) an increase in the equilibrium price of cigarettes.

Question 32

(Exhibit: The Demand for music downloads) A decrease in the price of iPods and other similar devices would result in a change illustrated by:

A) the move from f to g in Figure (a).
B) the move from h to i in Figure (b).
C) the move from j to k in Figure (c).
D) the move from l to m in Figure (d).

Question 33

Which of the following will not cause the demand for milk (a normal good) to increase in the current time period?

A) a fall in the price of milk
B) an increase in income
C) an expected increase in milk prices
D) a decrease in the price of cookies (a complement)

Question 34

An example of a demand shifter is:

A) factor prices.
B) technology.
C) consumer preferences.
D) producer expectations.

Question 35

Given that meat and potatoes are complementary goods, if the price of meat decreases substantially, there would be:

A) an increase in the demand for potatoes.
B) an increase in the quantity of potatoes demanded.
C) a decrease in the demand for potatoes.
D) no change in the demand for potatoes.

Question 36

Demand and supply curves are drawn assuming ceteris paribus. This means that:

A) economists ignore all assumptions.
B) economists don't watch for the fallacy of false cause.
C) changes will be proportional.
D) all other things besides price and quantity are assumed unchanged.

Question 37

If people demand more of product A when the price of B falls, then A and B are:

A) not related.
B) substitutes.
C) complements.
D) inferior.

Question 38

Which of the following would not change the demand for automobiles?

A) a change in the price of gasoline
B) a change in the cost of steel
C) a change in the price of motorcycles
D) a change in tastes

Question 39

Which of the following would result in a movement along the demand curve?

A) a change in preferences
B) an increase in the number of buyers
C) an increase in the number of suppliers
D) a decrease in income

Question 40

The slope and location of the demand curve depend on:

A) the number of buyers.
B) production costs.
C) the number of producers.
D) all of the above.

Question 41

For most goods, purchases tend to rise with increases in buyers' incomes and to fall with decreases in buyers' incomes. Such goods are known as:

A) inferior goods.
B) direct goods.
C) normal goods.
D) luxury goods.

Question 42

Given that chicken and beef are substitute goods, if the price of chicken decreases substantially, there would be:

A) an increase in the demand for beef.
B) a decrease in the demand for beef.
C) a decrease in the quantity of beef demanded.
D) no change in the demand for beef.

Question 43

Which of the following would shift the demand curve for new textbooks to the right?

A) A decrease in the price of paper.
B) A fall in the price of used textbooks.
C) An increase in college enrollments.
D) A fall in the price of new textbooks.

Question 44

Assuming that pizza is a normal good, if students' income at your college increases substantially, there would be:

A) a reduction in the demand for pizza.
B) an increase in the quantity of pizza demanded.
C) no change in the demand for pizza.
D) an increase in the demand for pizza.

Question 45

Which statement best illustrates complementary goods?

A) The price of tennis rackets declines so your economics instructor decides to take tennis lessons and purchases several cans of new tennis balls.
B) The price of Apple Macintosh computers declines so your economics instructor sells his or her IBM personal computer and buys a Macintosh.
C) After receiving a promotion and a hefty year-end bonus from the college, your economics instructor decides to stop buying denim jeans and switches to clothing befitting his or her loftier position on the faculty.
D) Fearing that the price of pipe tobacco will rise next year, your economics professor goes to his local tobacconist and purchases an ample supply to last for several years.

Question 46

An increase in the demand for gasoline today caused by concerns that gasoline prices will be higher tomorrow is most likely attributable to which demand shifter?

A) income
B) consumer expectations
C) consumer preferences
D) prices of other goods

Question 47

A supply curve that is upward sloping means that:

A) demand is being ignored.
B) consumers will buy less at lower prices.
C) suppliers will want to sell more at higher prices.
D) suppliers will want to sell less at higher prices.

Question 48

Supply is best defined as the:

A) relationship between the quantity of a good or service buyers are able to purchase, all other things unchanged.
B) relationship between the quantity of a good or service buyers are willing to purchase, all other things unchanged.
C) relationship between the quantity of a good or service sellers are willing to offer for sale and various prices, all other things unchanged.
D) quantity of a good or service sellers are willing to offer for sale at a specific price, all other things unchanged.

Question 49

After graduation from college you will receive a substantial increase in your income from a new job. If you decide that you will purchase more T-bone steak and less hamburger, then for you hamburger would be considered a(n):

A) normal good.
B) substitute good.
C) complementary good.
D) inferior good.

Question 50

Economists know that a particular good can be classified as an inferior good if a(n) ________ in buyers' income causes a(n) ________ .

A) increase; increase in demand
B) increase; increase in quantity demanded
C) increase; decrease in demand
D) decrease; decrease in demand

Question 51

Every day for the past two years you've had ham and cheese on a whole wheat bagel for lunch at Bungalow Bob's Bagel Boutique. However, the price of whole wheat bagels has risen by 10 cents so today you decide to have ham and cheese on a rye bagel. In this case, whole wheat and rye bagels are best considered:

A) superior goods.
B) normal goods.
C) substitute goods.
D) complementary goods.

Question 52

The Case in Point on campus parking suggested that giving students lower fares for taking public transportation was what kind of factor in the demand for parking spaces?

A) supply shifter
B) demand shifter
C) false prophet
D) spoiler

Question 53

When economists study the behavior of sellers, they are studying:

A) supply.
B) the role of government.
C) demand.
D) accounting.

Question 54

The relationship between the quantity of a good or service sellers are willing to offer for sale at different prices is:

A) supply.
B) demand.
C) equilibrium.
D) disequilibrium.

Question 55

How a supply curve is sloped and located is affected by:

A) consumer preferences.
B) resource prices.
C) the number of consumers.
D) all of the above.

Question 56

A decrease in supply means:

A) a shift to the left of the entire supply curve.
B) moving downward (to the left) along the supply curve with lower prices.
C) less will be demanded at every price.
D) more will be supplied at every price.

Question 57

An increase in the price of football tickets will cause the ________ for (of) basketball tickets (a substitute) to ________ .

A) demand; increase
B) demand; decrease
C) supply; decrease
D) supply; increase

Question 58

An increase in the demand for medical services caused by an increase in the number of people over 65 is most likely attributable to which demand shifter?

A) income
B) consumer preferences
C) prices of other goods
D) demographic characteristics

Question 59

In the Case in Point on campus parking, the implication was that existing prices for parking spaces on university campuses are generally:

A) too high.
B) too low.
C) about right.
D) unconscionable.

Question 60

A curve that shows the relationship between the price and quantity supplied during a particular period, all other things unchanged, is the:

A) price curve.
B) supply curve.
C) quantity function.
D) production possibilities curve.

Question 61

(Exhibit: Demand and Supply-Determinants) The exhibit shows how supply and demand might shift in response to specific events. Suppose a fall frost destroys one-third of the nation's grapefruit crop. Which panel best describes how this will affect the market for Vitamin B-12 tablets, which are a substitute for grapefruit?

A) Panel (a)
B) Panel (b)
C) Panel (c)
D) Panel (d)

Question 62

(Exhibit: The Determinants of Demand and Supply) The exhibit shows how supply and demand might shift in response to specific events. Suppose a fall frost destroys one-third of the nation's orange crop. Which panel best describes how this will affect the market for Vitamin C tablets, which are a substitute for oranges?

A) Panel (a)
B) Panel (b)
C) Panel (c)
D) Panel (d)

Question 63

If a demand curve shifts to the left, then:

A) the equilibrium price would go up and the equilibrium quantity would go down.
B) the equilibrium price would go down and the equilibrium quantity would go up.
C) a lower equilibrium price and quantity would result.
D) a higher equilibrium price and quantity would result.

Question 64

(Exhibit: Demand and Supply-Determinants) The exhibit shows how supply and demand might shift in response to specific events. Suppose a drought destroys one-third of the nation's peanut crop. Which panel best describes how this will affect the market for peanuts?

A) Panel (a)
B) Panel (b)
C) Panel (c)
D) Panel (d)

Question 65

An increase in demand, all other things unchanged, will result in a(n) ________ in the equilibrium price and a(n) ________ in the equilibrium quantity.

A) increase; increase
B) decrease; decrease
C) decrease; increase
D) increase; decrease

Question 66

Which of the following is true?

A) If demand decreases, equilibrium price increases.
B) If demand increases, equilibrium price decreases.
C) If demand decreases, the demand curve shifts to the left.
D) If demand decreases, the demand curve shifts to the right.

Question 67

Given a supply curve that is positively sloped and a demand curve for a normal good that is negatively sloped, an increase in income will most likely result in:

A) an increase in price and quantity.
B) a decrease in price and an increase in quantity.
C) a decrease in both price and quantity.
D) an increase in price and a decrease in quantity.

Question 68

(Exhibit: The Determinants of Demand and Supply) The exhibit shows how supply and demand might shift in response to specific events. Suppose consumer incomes increase. Which panel best describes how this will affect the market for used furniture, an inferior good?

A) Panel (a)
B) Panel (b)
C) Panel (c)
D) Panel (d)

Question 69

(Exhibit: The Determinants of Demand and Supply) The exhibit shows how supply and demand might shift in response to specific events. Suppose the population increases. Which panel best describes how this will affect the market for apples?

A) Panel (a)
B) Panel (b)
C) Panel (c)
D) Panel (d)

Question 70

(Exhibit: Demand and Supply-Determinants) The exhibit shows how supply and demand might shift in response to specific events. Suppose consumer incomes decrease. Which panel best describes how this will affect the market for used clothing, an inferior good?

A) Panel (a)
B) Panel (b)
C) Panel (c)
D) Panel (d)

Question 71

The price of eggs might go up because:

A) of an increase in the price of bacon.
B) the price of chicken feed increased.
C) the supply of eggs increased.
D) the demand for eggs fell.

Question 72

(Exhibit: Demand and Supply-Determinants) The exhibit shows how supply and demand might shift in response to specific events. Suppose the birth rate (the number of babies per female in the childbearing age bracket) decreases. Which panel best describes how this will affect the market for diapers?

A) Panel (a)
B) Panel (b)
C) Panel (c)
D) Panel (d)

Question 73

(Exhibit: Demand and Supply-Determinants) The exhibit shows how supply and demand might shift in response to specific events. Suppose scientists discover that eating pomegranates causes premature aging. Which panel best describes how this will affect the market for pomegranates?

A) Panel (a)
B) Panel (b)
C) Panel (c)
D) Panel (d)

Question 74

(Exhibit: The Determinants of Demand and Supply) The exhibit shows how supply and demand might shift in response to specific events. Suppose scientists discover that eating a tomato a day prevents aging. Which panel best describes how this will affect the market for tomatoes?

A) Panel (a)
B) Panel (b)
C) Panel (c)
D) Panel (d)

Question 75

It is true that the equilibrium quantity will always go up if supply:

A) and demand both increase.
B) increases and demand decreases.
C) and demand both decrease.
D) decreases and demand remains unchanged.

Question 76

Which of the following will result in an increased price of milk?

A) A shift to the right of the supply curve for milk.
B) A shift to the right of the demand curve for milk.
C) An increase in the number of milk suppliers.
D) A decrease in the number of milk buyers.

Question 77

(Exhibit: The Determinants of Demand and Supply) The exhibit shows how supply and demand might shift in response to specific events. Suppose a fall frost destroys one-third of the nation's orange crop. Which panel best describes how this will affect the market for oranges?

A) Panel (a)
B) Panel (b)
C) Panel (c)
D) Panel (d)

Question 78

(Exhibit: The Determinants of Demand and Supply) The exhibit shows how supply and demand might shift in response to specific events. Suppose a new machine is developed that allows restaurants and fast-food outlets to produce French fries at a lower cost. Which panel best describes how this will affect the market for French fries?

A) Panel (a)
B) Panel (b)
C) Panel (c)
D) Panel (d)

Question 79

A shift of a demand curve to the right, all other things unchanged, will:

A) increase equilibrium price and quantity.
B) decrease equilibrium price and quantity.
C) decrease quantity and increase price.
D) increase quantity and decrease price.

Question 80

A shift in the demand curve to the left, all other things unchanged:

A) will cause the supply curve to shift to the left, too.
B) will cause a movement upward along the supply curve and a higher equilibrium price.
C) will cause a movement downward along the supply curve and a lower equilibrium quantity.
D) will result in a lower equilibrium price and greater equilibrium quantity.