Deck 4: Supply and Demand

Question 1

According to the law of demand, an increase in the price of baseball trading cards causes:

A)people to buy fewer trading cards.
B)people to buy more trading cards.
C)the scarcity of baseball trading cards to increase.
D)baseball trading cards to grow in abundance.

Answer 1

people to buy fewer trading cards.

Question 2

At a price of $3.50, the quantity supplied by the market will be
14.

Answer 2

True

Question 3

Suppose that college tuition is higher this year than last year and that more students are enrolled in college this year than last year.Based on this information, we can best conclude that:

A)the law of demand is invalid.
B)despite the increase in price, quantity demanded rose due to some other factor changing.
C)this situation has nothing to do with the law of demand.
D)the demand for a college education is positively sloped.

Answer 3

despite the increase in price, quantity demanded rose due to some other factor changing.

Question 4

An increase in the number of firms causes the price firms are able to charge to fall, which results in a movement along the market supply curve.

Question 5

According to the law of demand, only the price of a good influences the amount people will choose to purchase.

Question 6

An increase in demand causes equilibrium price and quantity to rise, other things constant.

Question 7

A demand curve is downward sloping because as the price of a good falls, demanders will substitute some other good for that good whose price has fallen.

Question 8

Refer to the graphs shown.The curve that best demonstrates the law of demand is:

A)I.
B)II.
C)III.
D)IV.

Question 9

The law of supply states that more of a good will be supplied the lower its price, other things constant.

Question 10

If the price of chicken rises and the price of beef does not rise, consumers will respond by:

A)substituting beef for chicken.
B)substituting chicken for beef.
C)reducing purchases of beef and chicken.
D)increasing purchases of beef and chicken.

Question 11

The law of demand states that the quantity demanded of a good is inversely related to the price of that good.Therefore, as the price of a good goes:

A)up, the quantity demanded also goes up.
B)up, the quantity demanded goes down.
C)down, the quantity demanded goes down.
D)down, the quantity demanded stays the same.

Question 12

Suppliers will supply more of a good when the price of that good rises because the opportunity cost of not producing that good has risen.

Question 13

The law of demand states that consumers buy more of a good when its price declines:

A)because their income increases at the same time.
B)only if their income increases at the same time.
C)even if other demand determinants change at the same time.
D)provided all else remains constant.

Question 14

The explanation for the law of demand involves:

A)suppliers' ability to substitute inputs.
B)consumers' ability to substitute different goods.
C)the government's ability to set prices.
D)the market's ability to equate supply and demand.

Question 15

Which of the following situations best demonstrates the law of demand?

A)Movie-goers react to an increase in the price of a theater ticket by seeing fewer movies per year.
B)Movie-goers see fewer movies per year due to an overall decrease in the quality of newly released motion pictures.
C)A drought causes a decrease in the availability of pumpkins, resulting in fewer jack-o-lanterns displayed on Halloween.
D)An increase in the number of people writing Economics textbooks results in a decrease in average textbook prices.

Question 16

Refer to the graphs shown.If the quantity demanded by consumers is the same for every price, then the demand curve would look like:

A)I.
B)II.
C)III.
D)IV.

Question 17

If cigar prices tripled while sales of cigars rose 30 percent, this would likely be due to a shift in demand.

Question 18

A change in the price of carrots will cause a movement along the demand curve for carrots and a shift in the demand for substitute vegetables.

Question 19

When quantity demanded is greater than quantity supplied, the resulting shortage causes the price to fall.

Question 20

An improvement in the technology for producing a good will shift the supply curve for that good to the left.

Question 21

According to the law of demand an increase in the price of gasoline will:

A)increase the quantity demanded of gasoline, other things constant.
B)decrease the quantity demanded of gasoline, other things constant.
C)increase the demand for gasoline.
D)decrease the demand for gasoline.

Question 22

Tuition and fees for four year colleges in the United States have risen over five percent per year in the recent past.One cause for the increase in price has been an increase in demand for college education.In the standard model, what could be a possible explanation for the increase in the demand for college education?

A)More colleges have been established
B)The cost of two-year colleges has declined over the same period
C)Income in the United States has risen
D)The price of all other goods in the economy has risen 3 percent over the same period

Question 23

Refer to the graph shown.If the price is changed from $12.00 to $4.00, the quantity demanded increases by:

A)2 CDs per week.
B)4 CDs per week.
C)6 CDs per week.
D)8 CDs per week.

Question 24

Which of the following would likely result in an increase in the demand for beef?

A)A decrease in the supply of beef
B)An increase in family incomes
C)An increase in the price of feed grains for cattle
D)A decrease in the price of pork

Question 25

Refer to the graph shown.The quantity demanded when price is $16.00 per week is:

A)2 CDs per week.
B)4 CDs per week.
C)6 CDs per week.
D)8 CDs per week.

Question 26

Refer to the graphs shown.Assume the graph reflects demand in the automobile market.Which arrow best captures the impact of increased gasoline prices on the automobile market?

A)A
B)B
C)C
D)D

Question 27

Sometimes price cuts can have an unintended result of consumers waiting for deeper discounts.What does this waiting suggest about supply and demand?

A)The demand curve slopes the wrong way because price cuts have lead to smaller sales.
B)If buyers are buying less when price falls, the supply curve must have moved left.
C)If buyers are buying less when price falls, the supply curve must have moved right.
D)Price cuts have changed buyers' expectations, and the change in expectations has moved the demand curve left.

Question 28

Assume the graph shown reflects demand in the automobile market.Which arrow best captures the impact of increased consumer income on the automobile market?

A)A
B)B
C)C
D)D

Question 29

To derive a market demand curve from individual demand curves, it would be necessary to:

A)take the maximum quantity of each demand curve as the market quantity demanded at each price.
B)sum the curves horizontally, adding quantities demanded at each price.
C)take the demand curve that is the furthest to the right as the market demand curve.
D)multiply the quantities demanded on each demand curve at each price to find the market quantity demanded at each price.

Question 30

The growing popularity of a commercial weight-loss diet that includes reducing the amount of carbohydrates consumed will cause:

A)an increase in the demand for bread.
B)a decrease in the demand for bread.
C)a movement down and to the right along the demand for bread curve.
D)a movement up and to the left along the demand for bread curve.

Question 31

Given that diesel cars get much better gas mileage than the typical car, an increase in the price of gasoline would be expected to:

A)increase the demand for diesel cars.
B)decrease the demand for gasoline.
C)decrease the demand for diesel cars.
D)increase the demand for gasoline.

Question 32

Which of the following would cause quantity demanded to change without changing the demand curve?

A)A change in income
B)A change in the price of the good
C)Achange in tastes and preferences
D)Achange in the price of a substitute good

Question 33

Which of the following is not held constant as you move along the demand curve?

A)The price of that good
B)The price of other goods
C)The incomes of consumers
D)The preferences of consumers for the good

Question 34

Three hurricanes, combined with the already high real-estate prices, have made people reconsider whether to retire to Florida.The cost of homeownership has increased due to stricter building codes.The influx of retirees is not expected to change because the baby boom generation is approaching retirement age and Florida has long attracted many retirees.Which of the following factors is tending to move the demand curve for Florida housing to the right?

A)The aging of the baby boomers, increasing the number of people who are retiring
B)The increase in the cost of insurance
C)The already high real-estate prices
D)The current high construction costs

Question 35

The use of the phrase "other things constant" in supply and demand analysis indicates that:

A)an equilibrium price has been reached.
B)an equilibrium quantity has been reached.
C)we are considering changes in just one factor.
D)we are considering all the changes which might take place in actual markets.

Question 36

The effect of higher gasoline prices is most likely to:

A)increase the demand for hybrid cars and increase the demand for the gas guzzler Hummer.
B)decrease the demand for hybrid cars and decrease the demand for the gas guzzler Hummer.
C)increase the demand for hybrid cars and decrease the demand for the gas guzzler Hummer.
D)decrease the demand for hybrid cars and increase the demand for the gas guzzler Hummer.

Question 37

The distinction between demand and the quantity demanded is best made by saying that:

A)demand is represented graphically by a curve and quantity demanded is a point on that curve.
B)the quantity demanded is represented graphically by a curve and demand is a point on that curve.
C)the quantity demanded is in a direct relation with prices, whereas demand is in an inverse relation.
D)the quantity demanded is in an inverse relation with prices, whereas demand is in a direct relation.

Question 38

Refer to the graphs shown.An increase in quantity demanded is best shown by which arrow?

A)A
B)B
C)C
D)D

Question 39

Refer to the graphs shown.The effect of an increase in price is best shown by which arrow?

A)A
B)B
C)C
D)D

Question 40

Refer to the graphs shown.What arrow shows the effect of an increase in the number of consumers in the market on the demand for CDs?

A)A
B)B
C)C
D)D

Question 41

Which statement is not consistent with the law of supply?

A)More of a good will be supplied, the higher the price, other things constant.
B)Less of a good will be supplied, the lower the price, other things constant.
C)Quantity supplied of a good is directly related to the good's price.
D)Quantity supplied of a good is inversely related to the good's price.

Question 42

If the price of steel rises, the law of supply predicts that, other things constant, the:

A)supply of steel will increase.
B)supply of steel will decrease.
C)quantity supplied of steel will increase.
D)quantity supplied of steel will decrease.

Question 43

According to the law of supply, what will motivate firms to increase their quantity supplied of a product?

A)Production cost
B)Fixed cost
C)Price
D)Supply

Question 44

According to the law of supply:

A)supply curves slope upward.
B)supply curves slope downward.
C)price and quantity supplied are negatively related.
D)price and quantity supplied are inversely related.

Question 45

Refer to the graphs shown.If quantity supplied is a fixed amount that does not vary with price, then the supply curve looks like:

A)I.
B)II.
C)III.
D)IV.

Question 46

Refer to the graphs shown.The arrow that best shows an increase in supply is:

A)W
B)X
C)Y
D)Z

Question 47

Suppose farmers can use their land to grow either wheat or corn.The law of supply predicts that an increase in the market price of wheat will cause:

A)farmers to substitute wheat for the production of corn.
B)farmers to substitute corn for the production of wheat.
C)farmers to lower the production of corn and wheat.
D)farmers to raise the production of wheat and corn.

Question 48

Refer to the graphs shown.The curve that best illustrates the law of supply is:

A)I.
B)II.
C)III.
D)IV.

Question 49

If the law requires apartment building owners to lower rent, the law of supply predicts that, other things constant, the:

A)supply of apartment units will shift leftward.
B)supply of apartment units will shift rightward.
C)quantity of apartment units supplied will rise.
D)quantity of apartment units supplied will fall.

Question 50

The law of supply states that, other things constant, there is:

A)an inverse relation between price and the quantity supplied.
B)an inverse relation between price and supply.
C)a direct relation between price and the quantity supplied.
D)a direct relation between price and supply.

Question 51

Refer to the table that presents Mike and Janet's demand for apples by the peck.If they are the only two in the market, a market demand curve derived from this data would show quantity demanded is:

A)22 at price = $1 and 18 at price =.
B)21 at price = $1 and 17 at price =.
C)28 at price = $1 and 21 at price =.
D)21 at price = $1 and 28 at price =.

Question 52

When applied to labor markets, the law of supply suggests that:

A)an increase in the wages earned by nurses will cause the quantity of nurses supplied to increase.
B)a decrease in the wages earned by nurses will cause the quantity of nurses supplied to increase.
C)an increase in the wages earned by nurses will cause the quantity of nurses demanded to increase.
D)a decrease in the wages earned by nurses will cause the quantity of nurses demanded to increase.

Question 53

An upward sloping supply curve implies that:

A)quantity supplied increases when price decreases.
B)quantity supplied increases when price increases.
C)the law of supply is invalid.
D)there is no relationship between price and quantity supplied.

Question 54

Refer to the table that presents Mike and Janet's demand for apples by the peck.If they are the only two in the market, which of the following represents a point on the market demand curve?

A)price = $1, quantity = 18
B)price = $2, quantity = 21
C)price = $4, quantity = 0
D)price = $4, quantity = 21

Question 55

Assume the graphs shown reflect the egg market.The arrow that would best capture the impact of cheaper, prefabricated henhouses on the egg market is:

A)W
B)X
C)Y
D)Z

Question 56

Refer to the graphs shown.The arrow that best captures the impact of a decline in price on quantity supplied is:

A)W
B)X
C)Y
D)Z

Question 57

The distinction between supply and the quantity supplied is best made by saying that:

A)the quantity supplied is represented graphically by a curve and supply as a point on that curve.
B)supply is represented graphically by a curve and quantity supplied as a point on that curve.
C)the quantity supplied is in a direct relation with prices, whereas supply is in an inverse relation.
D)the quantity supplied is in an inverse relation with prices, whereas supply is in a direct relation.

Question 58

The theory that quantity supplied and price are positively related, other things constant, is referred to as the law of:

A)opportunity cost.
B)profit maximization.
C)supply.
D)demand.

Question 59

The law of supply states that, other things equal, as the price of a good goes:

A)up, the quantity supplied goes up.
B)up, the supply goes down.
C)down, the quantity supplied goes up.
D)down, the supply goes down.

Question 60

Suppose when you are offered $7.00 per hour to work in the campus library, you choose not to work, but when you are offered $10.00 per hour, you accept a part-time position.Your behavior can best be explained by the fact that your supply of labor curve is:

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

Question 61

Which of the following would be expected to cause an increase in the supply of fax machines?

A)An increase in the number of business firms demanding fax machines
B)An increase in the price of fax machines
C)A decrease in the cost of manufacturing fax machines
D)The expectation that the price of fax machines will increase in future

Question 62

Graphically, a change in price causes:

A)both supply and demand to shift.
B)the demand curve to shift.
C)a movement along a given supply curve, not a shift.
D)the supply curve to shift.

Question 63

If the price in a market is above its equilibrium level, there will be a:

A)surplus and downward pressure on price.
B)surplus and upward pressure on price.
C)shortage and downward pressure on price.
D)shortage and upward pressure on price.

Question 64

Refer to the graph shown.Suppose that at a price of $5.00, firm A is willing and able to supply 4 units and firm B is willing and able to supply 4 units.Which of the following statements is then true?

A)Curve S0 shows the quantity supplied of firm A and firm B combined.
B)Curve S1 shows the quantity supplied of firm A and firm B combined.
C)The addition of firm B to the market causes a movement upward and to the right alongS0.
D)The addition of firm B to the market causes a movement upward and to the right alongS1.

Question 65

Suppose OPEC announces that it will increase production.Using supply and demand analysis to predict the effect of increased production on equilibrium price and quantity, the first step is to show the:

A)demand curve shifting to the right.
B)demand curve shifting to the left.
C)supply curve shifting to the right.
D)supply curve shifting to the left.

Question 66

Suppose a market has an excess demand and price starts to rise.What will the rise in price cause?

A)A fall in both quantity supplied and quantity demanded.
B)A rise in both quantity supplied and quantity demanded.
C)A rise in quantity supplied and a fall in quantity demanded.
D)A fall in quantity supplied and a rise in quantity demanded.

Question 67

Which of the following will move the supply curve for housing in Florida, a popular retirement state, to the left?

A)Increasing the number of people who are retiring
B)Increase in the cost of insurance
C)Higher real-estate prices
D)Higher construction costs

Question 68

Which of the following would best explain a decrease in the supply of squash?

A)An increase in the price of other vegetables
B)An increase in the price of squash
C)A decrease in the price of squash
D)A decrease in the cost of growing squash

Question 69

If Argentina imposes a 20 percent tax on natural gas exports to be paid by suppliers.Other things equal, this causes the:

A)supply of natural gas exports to shift to the right.
B)supply of natural gas exports to shift to the left.
C)quantity of natural gas exports produced to increase.
D)demand for natural gas exports to shift to the right.

Question 70

Refer to the graph shown.A shift from S1 to S0 would most likely occur for what reason?

A)An increase in the number of suppliers in the market
B)A decrease in taxes levied on producers of CDs
C)An increase in the price of CDs
D)An increase in the cost of producing CDs

Question 71

When quantity supplied is greater than quantity demanded, prices tend to:

A)fall.
B)rise.
C)stay the same.
D)remain constant until the next season.

Question 72

Which of the following is not likely to change the supply of personal computers?

A)An increase in consumers' incomes
B)A technological breakthrough that makes it much less costly to produce computer chips
C)A decrease in the wage paid to electrical engineers
D)An increase in taxes on computer chips paid by producers

Question 73

Which of the following would not move either the supply or the demand curve in the market for housing?

A)An increase in the number of people who are retiring
B)An increase in the cost of home insurance
C)An increase in real-estate prices
D)A possibility of higher construction costs

Question 74

Price tends to be in equilibrium where supply and demand intersect because when quantity supplied:

A)equals quantity demanded, prices don't change.
B)exceeds quantity demanded, prices have a tendency to rise.
C)is less than quantity demanded, prices tend to fall.
D)equals quantity demanded, prices will fall.

Question 75

Refer to the graph shown.A shift from S0 to S1 would most likely occur for what reason?

A)Adecrease in the number of suppliers in the market
B)An increase in taxes levied on producers of CDs
C)An increase in the price of CDs
D)Adecrease in the cost of producing CDs

Question 76

If supply and demand intersect at a price of $5.00, then a reduction in price from $6.00 to $5.00 will cause an increase in quantity:

A)supplied, a decrease in quantity demanded, and the alleviation of a shortage.
B)demanded, a decrease in quantity supplied, and the alleviation of a shortage.
C)supplied, a decrease in quantity demanded, and the alleviation of a surplus.
D)demanded, a decrease in quantity supplied, and the alleviation of a surplus.

Question 77

The supply of leather jackets would be expected to increase as a result of:

A)a decrease in the cost of producing leather jackets.
B)an increase in the price of leather jackets.
C)an increase in the popularity of leather jackets.
D)the expectation that the price of leather jackets will rise in the future.

Question 78

Which of the following would be expected to cause the quantity of wool supplied to decrease?

A)A decrease in the price of wool
B)Adecrease in the number of wool producers
C)An increase in the cost of raising sheep
D)An increase in wages paid to workers in the wool industry

Question 79

Refer to the graph shown.If the quantity supplied increases from 2 to 4 when the price of CDs increases from $2.00 to $5.00, the response by producers would be shown by:

A)a shift from S0 toS1.
B)a shift from S1 toS0.
C)a movement upward and to the right alongS0.
D)a movement upward and to the right alongS1.

Question 80

In the early 2000s car sales in China had slowed in part caused by the government's actions to limit businesses from lending funds to consumers.Assuming the car market in China can be analyzed with demand and supply curves, what best reflects the change in the market?

A)Demand curve shifts to the left with no change in supply.
B)Supply curve shifts to the left with no change in demand.
C)Both the supply and demand curves shift to the left.
D)Both the supply and demand curves shift to the right.