Deck 4: The Market Forces of Supply and Demand

Question 1

The law of demand states that, other things equal, when the price of a good rises, the quantity demanded of the good rises, and when the price falls, the quantity demanded falls.

Answer 1

False

Question 2

A newspaper's classified ads are an example of a market.

Answer 2

True

Question 3

Monopolists are price takers.

Answer 3

False

Question 4

Prices allocate a market economy's scarce resources.

Question 5

In a perfectly competitive market, the goods offered for sale are all exactly the same.

Question 6

Local cable television companies frequently are monopolists.

Question 7

In a competitive market, the quantity of each good produced and the price at which it is sold are not determined by any single buyer or seller.

Question 8

Individual demand curves are summed horizontally to obtain the market demand curve.

Question 9

The quantity demanded of a product is the amount that buyers are willing and able to purchase at a particular price.

Question 10

All goods and services are sold in perfectly competitive markets.

Question 11

A market is a group of buyers and sellers of a particular good or service.

Question 12

In a competitive market, there are so few buyers and so few sellers that each has a significant impact on the market price.

Question 13

Most markets in the economy are highly competitive.

Question 14

Sellers as a group determine the demand for a product, and buyers as a group determine the supply of a product.

Question 15

A yard sale is an example of a market.

Question 16

If a good or service has only one seller, then the seller is called a monopoly.

Question 17

In a perfectly competitive market, buyers and sellers are price setters.

Question 18

In a market economy, supply and demand determine both the quantity of each good produced and the price at which it is sold.

Question 19

The law of demand is true for most goods in the economy.

Question 20

The law of demand states that, other things equal, when the price of a good rises, the quantity demanded of the good falls, and when the price falls, the quantity demanded rises.

Question 21

A decrease in the price of a product and an increase in the number of buyers in the market affect the demand curve in the same general way.

Question 22

An increase in the price of a substitute good will shift the demand curve for a good to the right.

Question 23

If the demand for a good falls when income falls, then the good is called an inferior good.

Question 24

A decrease in the price of a complement will shift the demand curve for a good to the left.

Question 25

If orange juice and apple juice are substitutes, an increase in the price of orange juice will shift the demand curve for apple juice to the right.

Question 26

If a determinant of demand other than price changes, the demand curve shifts.

Question 27

The demand curve is the upward-sloping line relating price and quantity demanded.

Question 28

If orange juice and apple juice are substitutes, an increase in the price of orange juice will shift the demand curve for apple juice to the left.

Question 29

An increase in demand shifts the demand curve to the left.

Question 30

Baseballs and baseball bats are substitute goods.

Question 31

The market demand curve shows how the total quantity demanded of a good varies as the income of buyers varies, while all the other factors that affect how much consumers want to buy are held constant.

Question 32

If something happens to alter the quantity demanded at any given price, then the demand curve shifts.

Question 33

Public service announcements, mandatory health warnings on cigarette packages, and the prohibition of cigarette advertising on television are all policies aimed at shifting the demand curve for cigarettes to the right.

Question 34

When Mario's income decreases, he buys more pasta. For Mario, pasta is a normal good.

Question 35

A movement upward and to the left along a given demand curve is called a decrease in demand.

Question 36

An increase in the price of pizza will shift the demand curve for pizza to the left.

Question 37

Individual demand curves are summed vertically to obtain the market demand curve.

Question 38

A decrease in demand shifts the demand curve to the left.

Question 39

When an increase in the price of one good lowers the demand for another good, the two goods are called complements.

Question 40

A decrease in income will shift the demand curve for an inferior good to the right.

Question 41

A decrease in the price of baseball bats will decrease the demand for baseballs.

Question 42

When the price of a good is high, selling the good is profitable, and so the quantity supplied is large.

Question 43

If a person expects the price of pumpkins to increase next month, then that person's current demand for pumpkins will increase.

Question 44

The law of supply states that, other things equal, when the price of a good falls, the quantity supplied falls as well.

Question 45

When the price of a good is low, selling the good is profitable, and so the quantity supplied is large.

Question 46

If baked potatoes and sour cream are complements, then an increase in the price of sour cream decreases the demand for baked potatoes.

Question 47

Cocoa and marshmallows are complements, so a decrease in the price of cocoa will cause an increase in the demand for marshmallows.

Question 48

A movement along a supply curve is called a change in supply while a shift of the supply curve is called a change in quantity supplied.

Question 49

An increase in the price of a product and an increase in the number of sellers in the market affect the supply curve in the same general way.

Question 50

If the producers of canned green beans expect the price of canned green beans to increase in the future due to an increase in demand, they may put some of their current production into storage and supply less in the market today.

Question 51

The law of supply states that, other things equal, when the price of a good rises, the quantity supplied of the good falls.

Question 52

Most studies have found that tobacco and marijuana are substitutes rather than complements.

Question 53

If a higher price means a greater quantity supplied, then the supply curve slopes upward.

Question 54

A decrease in the price of pizza will shift the supply curve for pizza to the left.

Question 55

If something happens to alter the quantity supplied at any given price, then we move along the fixed supply curve to a new quantity supplied.

Question 56

Most studies have found that tobacco and marijuana are complements rather than substitutes.

Question 57

A decrease in supply shifts the supply curve to the left.

Question 58

Whenever a determinant of supply other than price changes, the supply curve shifts.

Question 59

The quantity supplied of a good or service is the amount that sellers are willing and able to sell at a particular price.

Question 60

Price cannot fall so low that some sellers choose to supply a quantity of zero.

Question 61

At the equilibrium price, buyers have bought all they want to buy, but sellers have not sold all they want to sell.

Question 62

A market's equilibrium is the point at which the supply and demand curves intersect.

Question 63

Advances in production technology typically reduce firms' costs, which increases the quantity supplied at each price.

Question 64

The equilibrium price is the same as the market-clearing price.

Question 65

Individual supply curves are summed vertically to obtain the market supply curve.

Question 66

The actions of buyers and sellers naturally move markets toward equilibrium.

Question 67

A decrease in the price of sugar will shift the supply curve for cookies to the right.

Question 68

In a market, the price of any good adjusts until quantity demanded equals quantity supplied.

Question 69

When a seller expects the price of its product to decrease in the future, the seller's supply curve shifts left now.

Question 70

The market supply curve shows how the total quantity supplied of a good varies as input prices vary, holding constant all the other factors that influence producers' decisions about how much to sell.

Question 71

Sellers respond to a surplus by cutting their prices.

Question 72

When the market price is above the equilibrium price, the quantity of the good demanded exceeds the quantity supplied.

Question 73

At the equilibrium price, quantity demanded is equal to quantity supplied.

Question 74

If a company making frozen orange juice expects the price of its product to be higher next month, it will supply more to the market this month.

Question 75

A reduction in an input price will cause a change in quantity supplied but not a change in supply.

Question 76

A surplus is the same as an excess demand.

Question 77

If there is an improvement in the technology used to produce a good, then the supply curve for that good will shift to the left.

Question 78

An increase in the price of ink will shift the supply curve for pens to the left.

Question 79

Supply and demand together determine the price and quantity of a good sold in a market.

Question 80

When the market price is above the equilibrium price, suppliers are unable to sell all they want to sell.