Deck 3: Demand, supply, and Price

Question 1

A variable that is a "stock"

A)is measured per unit of time.
B)has meaning only at a point in time.
C)has only to do with products where inventory is kept.
D)has the same units as a flow variable.
E)is used only in accounting.

Answer 1

has meaning only at a point in time.

Question 2

Which statement best describes the "law of demand"? Other things being equal,the quantity of tennis rackets demanded will be greater if the

A)incomes of tennis players are higher.
B)price of tennis rackets is lower.
C)price of badminton rackets is higher.
D)number of tennis players is higher.
E)demand for tennis rackets rises.

Answer 2

price of tennis rackets is lower.

Question 3

Which statement best describes a "demand schedule"?

A)a functional statement of the demand relationship
B)a graph showing the inverse relationship between quantity demanded and price
C)a numerical table showing the quantities demanded at various prices
D)a timetable showing the quantity demanded at different time periods
E)an abstract concept underlying the graph of a demand curve

Answer 3

a numerical table showing the quantities demanded at various prices

Question 4

A demand curve represents graphically

A)a functional statement of the income-quantity relationship.
B)the timeless relationship between quantity demanded and price.
C)the quantity demanded per unit of time at various prices.
D)the available quantities at all possible prices for the product.
E)quantity demanded.

Question 5

Four of the five statements below contain a stock and a flow.Which statement describes ONLY flow variables?

A)Chris earns $1500 per month and has $4000 in his savings account at the bank.
B)Nancy spends $400 per month on her credit card and has a balance owing of $2567.
C)The Transit Authority of Mytown collects $22 000 in fares per day and has an operating budget of $2 million per year.
D)Country X spends an average of $1 million per year for flood relief and has an emergency services fund of $20 million.
E)The Canadian Federal government has a debt of approximately $750 billion and an annual deficit of over $25 billion dollars.

Question 6

What is a "normal" good?

A)a good that everyone normally consumes
B)a good that normal people consume
C)a good for which demand varies directly with household income
D)a good for which demand varies inversely with household income
E)a good for which demand does not vary with household income

Question 7

Four of the five statements below contain a stock and a flow.Which statement describes ONLY stock variables?

A)Chris earns $1500 per month and has $4000 in his savings account at the bank.
B)Nancy has a balance owing on her credit card of $2567 and a debt on her line of credit of $14,050.
C)The Transit Authority of Mytown collects $22 000 in fares per day and has an operating budget of $2 million per year.
D)Country X spends an average of $1 million per year for flood relief and has an emergency services fund of $20 million.
E)The Canadian Federal government has a debt of approximately $750 billion and an annual deficit of over $25 billion dollars.

Question 8

A change in demand is said to take place when there is a

A)movement along the demand curve.
B)shift of the demand curve.
C)shift of the supply curve.
D)price change.
E)quantity change.

Question 9

Which statement best describes a demand curve?

A)a functional statement of the demand relationship
B)a numerical table showing the inverse relationship between quantity demanded and price,other things being equal
C)a graph showing the relationship between quantity demanded and the price of a commodity,other things being equal
D)a timetable showing the quantity demanded at different time periods
E)an abstract concept underlying the graph of a demand curve

Question 10

The time period to which quantity demanded refers when constructing demand curves is

A)a moment in time.
B)a long period of time.
C)one year.
D)any specified time period.
E)a period shorter than one year.

Question 11

Ceteris paribus means

A)other things being equal.
B)and so forth.
C)knowledge gained before the study of evidence is made.
D)among other things.
E)in a historical context.

Question 12

What is an inferior good?

A)a good that everyone normally consumes
B)a good that inferior people consume
C)a good for which demand varies directly with household income
D)a good for which demand varies inversely with household income
E)a good for which demand does not vary with household income

Question 13

The term "quantity demanded" refers to the

A)total amount of a good that is actually purchased during a given period of time.
B)entire relationship between desired purchases and possible prices.
C)total amount of a good that purchasers wish to purchase at a given price during a given period of time.
D)product of advertising,and is unrelated to price.
E)total amount of a good that people wish to buy,regardless of price.

Question 14

The "law of demand" hypothesizes that,other things being equal,

A)the lower the price,the greater the demand.
B)price and demand vary inversely.
C)the higher the price,the lower the quantity demanded.
D)the higher the income,the higher the quantity demanded.
E)price and quantity demanded are positively related.

Question 15

In a market for a good or service,the quantities demanded and supplied are

A)both stock variables.
B)both flow variables.
C)a flow variable and a stock variable,respectively.
D)a stock variable and a flow variable,respectively.
E)neither stock nor flow variables.

Question 16

A demand curve is a representation of the relationship,ceteris paribus,between quantity demanded of a product and

A)supply.
B)wealth.
C)its price.
D)income.
E)preferences.

Question 17

Which of the following best defines quantity demanded of a good?

A)The amount an individual purchases at the good's current price.
B)The amount an individual purchases at his or her current income.
C)The amount,per time period,that is desired at the most recent price.
D)The amount,per time period,an individual desires to purchase at any given price.
E)The various amounts that all individuals desire at all relevant prices.

Question 18

An important assumption underlying a demand schedule is that

A)quantity demanded and demand mean the same thing.
B)everything else except the product's price is being held constant.
C)the numbers are not important; the general relationship between the variables is.
D)household tastes rarely change.
E)income has little significance to household demand.

Question 19

The "law of demand" describes

A)an inverse relationship between the price of a good and the quantity of the good demanded per unit of time,other things being equal.
B)a positive relationship between the price of a good and the quantity of the good demanded per unit of time,ceteris paribus.
C)an inverse relationship between the price of a good and the demand for the good,per unit of time.
D)a direct relationship between the price of a good and the demand for the good.
E)any relationship between quantity demanded and demand for a good.

Question 20

To say that the demand curve for movies is negatively sloped means that

A)less quantity will be demanded at lower prices.
B)less quantity will be demanded as preferences change.
C)less quantity will be demanded at higher prices.
D)more quantity will be demanded as consumers' income increases.
E)less quantity will be demanded at the same price.

Question 21

In which statement is the term "demand" used correctly? (1)A decrease in the price of airline tickets led to an increase in quantity demanded for airline tickets.(2)A decrease in the price of airline tickets led to an increase in the demand for airline tickets.

A)neither statement
B)the first statement only
C)the second statement only
D)both statements
E)more information is needed

Question 22

Consider cars and gasoline.Other things being equal,when the price of cars decreases,the demand for gasoline is likely to

A)remain unchanged because cars and gasoline are produced independently of one another.
B)decrease because the two goods are complements.
C)remain unchanged.
D)increase because the two goods are complements.
E)remain unchanged because cars and gasoline are two distinct markets.

Question 23

Which of the following pairs of goods are likely to be substitutes for a large group of consumers?

A)eggs and toast
B)coffee and cream
C)green beans and peas
D)wieners and buns
E)pancakes and syrup

Question 24

A change in which of the following variables will result in NO change in the demand for a given commodity?

A)average household income
B)the distribution of income
C)population
D)tastes in favour of the commodity
E)the price of the commodity

Question 25

A variable that is assumed to be constant along an individual's demand curve for good X is the

A)price of good X.
B)quantity of X demanded per unit of time.
C)price of a substitute good,Y.
D)amount of X the individual wishes to purchase.
E)consumer's real purchasing power.

Question 26

In which statement is the term "demand" used correctly? (1)An increase in the price of copper will lead to a decrease in the demand for copper.(2)An increase in the price of copper will lead to an increase in the demand for aluminum (a substitute for copper).

A)neither statement
B)the first statement only
C)the second statement only
D)both statements
E)more information is needed

Question 27

Goods X and Y are defined to be substitutes in consumption if

A)the supply of Y varies inversely with the price of X.
B)the two goods are virtually the same.
C)the supply of Y varies directly with the price of X.
D)the demand for Y varies directly with the price of X.
E)the demand for Y varies inversely with the price of X.

Question 28

"Demand" in a particular market refers to

A)only the quantity demanded by households at current market prices.
B)the quantity purchased at the current market price.
C)the quantity that is desired but not satisfied by current supply.
D)the entire relationship between quantity demanded and price.
E)the relationship between demand and supply.

Question 29

If tastes change so that a particular style of winter boots is now considered more appealing,the likely result is

A)a shift in the demand curve to the right.
B)a shift in the demand curve to the left.
C)a movement down the demand curve.
D)a movement up the demand curve.
E)no change in the demand curve.

Question 30

If goods X and Y are substitutes and the price of X falls,all other things being equal,the demand curve for Y will

A)shift to the left.
B)shift to the right.
C)not shift at all.
D)be indeterminate.

Question 31

When deriving the market demand curve for a commodity,the only variable(s)that can change is (are)the

A)price of a related commodity.
B)income of consumers.
C)quantity of the commodity demanded.
D)price of the commodity.
E)both C and D.

Question 32

Which of the following would cause a movement along the demand curve for ski-lift tickets,other things being equal?

A)a change in tastes in favour of skiing
B)an increase in price as the supply curve for lift tickets shifts to the left
C)a rise in the price of ski boots and skis
D)a rise in average household income
E)an increase in population

Question 33

Which of the following pairs of goods are likely to be complements for a large group of consumers?

A)televisions and radios
B)cars and trucks
C)tea and coffee
D)e-readers and e-books
E)tents and tent-trailers

Question 34

If goods X and Y are complements and the price of X falls,all other things being equal,the demand curve for Y will

A)shift to the left.
B)shift to the right.
C)not shift at all.
D)be indeterminate.

Question 35

Cars and gasoline are likely to be

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

Question 36

Consider butter and margarine,which are substitutes.When the price of butter falls,the demand curve for margarine is likely to

A)shift to the right.
B)shift to the left.
C)remain stationary.
D)remain stationary,although its price will fall.
E)remain stationary,although its price will rise.

Question 37

If the price of tea falls and as a consequence the demand for sugar rises,then tea and sugar are

A)substitute goods.
B)complementary goods.
C)luxury goods.
D)neutral goods.
E)independent goods.

Question 38

If goods X and Y are complements and the price of X rises,ceteris paribus,the demand curve for Y will

A)be indeterminate.
B)shift to the right.
C)shift to the left.
D)not shift at all.

Question 39

In which statement is the term "demand" used correctly? (1)An increase in the price of eggs will lead to a decrease in the demand for eggs.(2)An increase in the price of eggs will lead to a decrease in the demand for bacon.

A)neither statement
B)the first statement only
C)the second statement only
D)both statements
E)more information is needed

Question 40

Ceteris paribus,the position of the demand curve for apples will remain unchanged if there is a change in the

A)income of apple eaters.
B)price of apples.
C)hourly wage rate of most workers.
D)price of pears.
E)knowledge regarding the health benefits of eating fresh fruit.

Question 41

Suppose that the demand curves for goods A,B,and C have the following functional forms:,where Q denotes quantity demanded and P denotes price: Q_A = 120 - 3.5P_A - 6P_B
Q_B = 100 - 2P_B + 3P_C
Q_C = 1500 - 0.5P_C.
Based on these demand curves,which of the following pairs of goods are known to be substitutes?

A)A and C
B)A and B
C)B and C
D)A and C,and B and C
E)none of the pairs are substitutes

Question 42

Consider the following equations for the demand for good A,where Q_A denotes quantity demanded,P_A denotes price,and M denotes income: 1.Q_A = 120 + 3.5 P_A + 14M
2.Q_A = 120 - 3.5 P_A + 14M
3.Q_A = 120 - 3.5 P_A - 14M
Which of these equations represents a downward-sloping demand curve for a normal good?

A)1 only
B)2 only
C)3 only
D)1 and 2
E)none of the equations

Question 43

A supply curve is a representation of the relationship,ceteris paribus,between quantity supplied of a product and

A)demand.
B)quantity demanded.
C)the number of sellers.
D)preference of sellers.
E)the product's own price.

Question 44

Suppose that many coal mines are shut for environmental reasons.This will cause

A)no change in the supply curve,only a change in price.
B)a movement up the supply curve.
C)an increase in the supply of coal (a rightward shift of the supply curve).
D)a decrease in the supply of coal (a leftward shift of the supply curve).
E)a movement down the supply curve.

Question 45

The positive slope of a supply curve indicates that

A)as price goes up,quantity supplied will decrease.
B)consumers will want to buy less at higher prices.
C)as price goes up,quantity supplied will increase.
D)if the costs of production increase,the quantity supplied will increase.
E)as price goes up,quantity supplied will remain constant.

Question 46

Suppose the demand curves for goods A,B,and C have the following functional forms,where Q denotes quantity demanded,P denotes price,and M denotes income: Q_A = 120 - 3.5P_A - 6P_B + 14M
Q_B = 100 - 2P_B + 3P_C + 1.1M
Q_C = 1500 - 0.5P_C - 300M.
Based on these demand curves,which of the following goods are known to be inferior goods?

A)A
B)B
C)C
D)A and B only
E)A,B and C

Question 47

Suppose the demand curves for goods A,B,and C have the following functional forms,where Q denotes quantity demanded,P denotes price,and M denotes income: Q_A = 120 - 3.5P_A - 6P_B + 14M
Q_B = 100 - 2P_B + 3P_C + 1.1M
Q_C = 1500 - 0.5P_C - 300M.
Based on these demand curves,which of the following goods are known to be normal goods?

A)A
B)B
C)C
D)A and B only
E)A,B and C

Question 48

In which statement is the term "demand" used correctly? (1)An increase in the price of copper will lead to an increase in the demand for aluminum (a substitute for copper).(2)An increase in the price of aluminum will lead to a decrease in quantity demanded of aluminum.

A)neither statement
B)the first statement only
C)the second statement only
D)both statements
E)more information is needed

Question 49

Which of the following events would result in a change in the quantity demanded for some commodity but NOT a change in the demand for that commodity?

A)a change in average household income
B)a change in the distribution of income
C)a change in population
D)a change in tastes in favour of the commodity
E)a change in the price of the commodity

Question 50

Consider the following equations for the demand for good A,where Q_A denotes quantity demanded,P_A denotes price,and M denotes income: 1.Q_A = 120 + 3.5 P_A + 14M
2.Q_A = 120 - 3.5 P_A + 14M
3.Q_A = 120 - 3.5 P_A - 14M
Which of these equations represents a downward-sloping demand curve for an inferior good?

A)1 only
B)2 only
C)3 only
D)1 and 2
E)none of the equations

Question 51

FIGURE 3-1 Refer to Figure 3-1.A shift of the demand curve for energy-efficient light bulbs from D to D² could be caused by

A)an increase in the price of ordinary light bulbs.
B)a change in preferences away from ordinary bulbs to energy-efficient bulbs.
C)an expectation that new government regulation will require the use of energy-efficient light bulbs only.
D)a decrease in the price of energy-efficient light bulbs.
E)a news bulletin stating that energy-efficient light bulbs emit a harmful gas.

Question 52

FIGURE 3-1 Refer to Figure 3-1.If demand is given by the curve D,the ________ energy-efficient light bulbs is at a price of $9.

A)demand for
B)quantity purchased of
C)demand schedule for
D)quantity demanded of
E)quantity sold of

Question 53

Which of the following events would cause a change in the quantity supplied of some agricultural commodity but would not cause a change in the supply of that same commodity?

A)a change in factor costs
B)a technological change
C)a change in the price of the commodity
D)a change in the number of suppliers of the commodity
E)a change in the price of substitute goods

Question 54

FIGURE 3-1 Refer to Figure 3-1.The movement along the demand curve,D,from point v to point x,could be caused by

A)a change in preferences away from ordinary light bulbs to energy-efficient light bulbs.
B)a change in the price of energy-efficient light bulbs.
C)an increase in household income,which allows consumers to purchase more light bulbs.
D)a change in the price of ordinary light bulbs.
E)an expectation that new,government regulations will require the use of energy-efficient light bulbs only.

Question 55

Economists say there has been a change in demand when there is

A)a movement along the demand curve.
B)a shift of the demand curve.
C)a shift of the supply curve.
D)a price change.
E)a quantity change.

Question 56

Suppose that the demand curves for goods A,B,and C have the following functional forms:,where Q denotes quantity demanded and P denotes price: Q_A = 120 - 3.5 P_A - 6P_B
Q_B = 100 - 2P_B + 3P_C
Q_C = 1500 - 0.5P_C.
Based on these demand curves,which of the following pairs of goods are known to be complements?

A)B and C
B)A and C
C)A and B
D)A and C,and B and C
E)none of the pairs are complements

Question 57

Quantity demanded is a flow variable,which means that it must be expressed

A)as so much at a specific moment in time.
B)in units of the good per day.
C)in units of the good per week.
D)in units of the good per year.
E)in units of the good per period of time.

Question 58

FIGURE 3-1 Refer to Figure 3-1.A shift of the demand curve for energy-efficient light bulbs from D to D¹ could be caused by

A)a decrease in the price of ordinary light bulbs.
B)a news bulletin stating that energy-efficient light bulbs emit a harmful gas.
C)a decrease in the price of energy-efficient light bulbs.
D)an expectation that government regulation will soon prohibit the use of ordinary light bulbs.
E)a change in preferences toward ordinary light bulbs.

Question 59

Which statement best describes a "supply schedule"?

A)a functional statement of the supply relationship
B)a graph showing the positive relationship between quantity supplied and price
C)a timetable showing the quantity supplied at different time periods
D)a numerical table showing the quantities supplied at various prices
E)the graphical relationship between quantity supplied and price

Question 60

Suppose new medical research suggests that consuming 200 grams of tofu everyday helps to prevent heart disease.Widespread knowledge of this research,other things being equal,is likely to have what impact on the market for tofu?

A)shift the whole demand curve to the right
B)shift the whole demand curve to the left
C)movement along the demand curve to the right
D)movement along the demand curve to the left
E)there would likely be no effect

Question 61

To say that the supply curve is positively sloped means that

A)as price goes up,quantity supplied will decrease.
B)households will want to buy less at higher prices.
C)as price goes up,quantity supplied will increase.
D)if the costs of production increase,the quantity supplied will have to increase also.
E)as price goes up,quantity supplied will remain constant.

Question 62

A leftward shift in the supply curve indicates

A)a decrease in the quantity supplied at each price.
B)that an increase in income results in an increase in the quantity demanded at each price.
C)that more is demanded at each price.
D)an increase in the quantity supplied at each price.
E)that more suppliers have entered the industry.

Question 63

A rightward shift in the supply curve indicates

A)a decrease in the quantity supplied at each price.
B)that an increase in income results in an increase in the quantity demanded at each price.
C)that more is demanded at each price.
D)an increase in the quantity supplied at each price.
E)a shift in the demand curve also (because demand must equal supply).

Question 64

In which statement is the term "supply" used correctly? (1)An increase in the number of suppliers of copper will lead to an increase in the supply of copper.(2)An increase in the number of suppliers of copper will likely lead to a decrease in the quantity supplied of copper.

A)neither statement
B)the first statement only
C)the second statement only
D)both statements
E)more information is needed

Question 65

Suppose there is a decrease in the quantity supplied of copper at each price.This change would imply

A)a shift to the left of the supply curve.
B)a shift to the right of the supply curve.
C)a movement up the supply curve.
D)a movement down the supply curve.

Question 66

In which statement is the term "supply" used correctly? (1)An increase in the price of leather will lead to a decrease in the supply of leather.(2)An increase in the price of leather will lead to a decrease in the supply of leather boots.

A)the second statement only
B)neither statement
C)the first statement only
D)both statements
E)not enough information to tell

Question 67

The term "supply" in a particular market refers to

A)the particular quantity supplied at the moment.
B)only one point on the supply curve.
C)only one entry in a supply schedule.
D)the entire relationship between quantity supplied and price.
E)the quantity actually sold to consumers.

Question 68

In which statement is the term "supply" used correctly? (1)A hurricane that destroys orange groves in Florida will lead to a decrease in the quantity supplied of oranges.(2)A new technology that prevents a fungus in Florida orange trees will lead to an increase in the supply of oranges.

A)the first statement
B)the second statement
C)both statements
D)neither statement
E)more information is needed

Question 69

FIGURE 3-2 Refer to Figure 3-2.If the supply curve is given by S,the ________ energy-efficient light bulbs is when the price is $9.

A)quantity supplied of
B)quantity purchased of
C)quantity sold of
D)supply schedule for
E)supply of

Question 70

A fall in the price of potatoes,which are used in the production of french fries,will

A)lead to a decrease in the supply of french fries,causing the supply curve of french fries to shift to the left.
B)have no effect on the supply of french fries.
C)have no effect on the supply of french fries but cause a movement along the supply curve of french fries.
D)lead to a decrease in the demand for french fries.
E)lead to an increase in the supply of french fries,causing the supply curve of french fries to shift to the right.

Question 71

The term "quantity supplied" is the amount of a product that

A)firms wish to sell at a given price during a given period of time.
B)firms actually sell during a given period of time at a given price.
C)households wish firms would sell during a given period of time at a given price.
D)is exchanged between firms and consumers during a given period of time at a given price.
E)is supplied at a fair market price.

Question 72

Suppose that some resource X is necessary to produce some good Y.If the price of X falls,

A)the supply curve of resource X shifts to the left.
B)the supply curve of good Y shifts to the right.
C)the supply curve of good Y is unaffected.
D)there is a movement along the supply curve of good Y.
E)the demand curve for X shifts to the right.

Question 73

The supply for some good or service will decrease if

A)technology improves.
B)the prices of inputs fall.
C)the prices of inputs increase.
D)technology improves and the price of inputs falls.
E)more suppliers enter the industry.

Question 74

A "decrease in supply" refers to which of the following?

A)the likely result from a decrease in the price of a factor of production
B)a downward movement along a supply curve
C)a decrease in quantity supplied
D)a leftward shift in the supply curve
E)a drop in the quantity actually exchanged

Question 75

An increase in the number of firms wanting to provide accounting services will cause a ________ for accounting services.

A)leftward shift in the supply curve
B)rightward shift in the demand curve
C)leftward shift in the demand curve
D)rightward shift in the supply curve
E)simultaneous shift of both the demand and supply curves

Question 76

In which statement is the term "supply" used correctly? (1)An increase in the price of copper will lead to an increase in the quantity supplied of copper.(2)An increase in the price of copper will lead to an increase in the supply of copper.

A)neither statement
B)the first statement only
C)the second statement only
D)both statements
E)more information is needed

Question 77

A fall in the price of raw milk (which is used in the production of ice cream)will

A)decrease the supply of ice cream,causing the supply curve of ice cream to shift to the left.
B)increase the supply of ice cream,causing the supply curve of ice cream to shift to the right.
C)decrease the supply of ice cream,causing the supply curve to shift to the right.
D)have no effect on the supply curve of ice cream but cause a downward movement along the supply curve of ice cream.
E)increase the supply of ice cream,causing the supply curve to shift to the left.

Question 78

The market supply curve for wooden shipping crates would shift to the right

A)if a government subsidy for shipping crates is withdrawn.
B)if the price of lumber falls.
C)if a tax is applied to shipping crates.
D)if suppliers leave the industry.
E)if technological conditions for the production of crates deteriorates.

Question 79

An improvement in the technology used to produce solar panels will

A)lead to a leftward shift in the supply curve.
B)lead to a leftward shift of the demand curve.
C)lead to a rightward shift of the demand curve.
D)have no effect on the supply curve for solar panels.
E)lead to a rightward shift in the supply curve.

Question 80

Suppose that a newer way to produce a good is discovered,which reduces production costs for the good.This will cause

A)no change in the supply curve,only a change in price.
B)a decrease in supply (a leftward shift of the supply curve).
C)a movement up the supply curve.
D)a movement down the supply curve.
E)an increase in supply (a rightward shift of the supply curve).