Deck 3: Demand and Supply

Question 1

If the price of a chocolate bar is $1 and the price of a fast food meal is $5, then the

A) money price of a chocolate bar is 1/5 of a fast food meal per chocolate bar.
B) money price of a fast food meal is 1/5 of a chocolate bar per fast food meal.
C) relative price of a fast food meal is 5 chocolate bars per fast food meal.
D) relative price of a chocolate bar is 5 fast food meals per chocolate bar.

Answer 1

relative price of a fast food meal is 5 chocolate bars per fast food meal.

Question 2

When the demand curve shifts rightward and the supply curve shifts leftward, then the equilibrium price _______ and the equilibrium quantity _______.

A) rises; decreases
B) probably changes but the direction of the change cannot be determined; increases
C) rises; probably changes but the direction of the change cannot be determined
D) falls; increases

Answer 2

rises; probably changes but the direction of the change cannot be determined

Question 3

There is a technological advance in the production of a good and simultaneously also an increase in the expected future price. Which of the following will happen?

A) The equilibrium price will rise because the supply curve shifts rightward.
B) The technological improvement shifts the supply curve rightward while the increase in the expected future price shifts the supply curve leftward. The net effect is not known.
C) The equilibrium price falls because the supply curve shifts leftward.
D) The demand curve shifts rightward and the supply curve does not shift.

Answer 3

The technological improvement shifts the supply curve rightward while the increase in the expected future price shifts the supply curve leftward. The net effect is not known.

Question 4

The quantity demanded of a good or service is the amount that

A) a consumer would like to buy but might not be able to afford.
B) consumers plan to buy during a given time period at a given price.
C) is actually bought during a given time period at a given price.
D) firms are willing to sell during a given time period at a given price.

Question 5

Normal goods are those for which demand decreases as

A) the price of a substitute falls.
B) the good's own price rises.
C) income decreases.
D) the price of a complement falls.

Question 6

The above figure shows the market for pizza. Which figure shows the effect of an increase in the price of the tomato sauce used to produce pizza?

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

Question 7

Wants, as opposed to demands,

A) are the goods the consumer plans to acquire.
B) are the unlimited desires of the consumer.
C) depend on the price.
D) are the goods the consumer has acquired.

Question 8

The figure above shows supply curves for soft drinks. Suppose the economy is at point a. A movement to point b could be the result of

A) a decrease in the relative price of a soft drink.
B) an increase in the relative price of a soft drink.
C) an increase in the money price of a soft drink.
D) an increase in technology.

Question 9

The figure above shows the market for chocolate. People become more concerned that eating chocolate causes them to gain weight, which they do not like. As a result, the

A) demand curve shifts from D2 to D1 and the supply curve does not shift.
B) demand curve shifts from D2 to D1 and the supply curve shifts from S2 to S1.
C) demand curve does not shift, and the supply curve shifts from S1 to S2.
D) demand curve shifts from D1 to D2 and the supply curve shifts from S1 to S2.

Question 10

A decrease in the expected future price of cars

A) increases the current quantity demanded of cars, that is, there is a movement downward along the demand curve for cars.
B) decreases the current demand for cars, that is, there is a leftward shift of the demand curve for cars.
C) increases the current demand for cars, that is, there is a rightward shift of the demand curve for cars.
D) decreases the current quantity demanded of cars, that is, there is a movement upward along the demand curve for cars.

Question 11

In the figure above, an increase in the supply of oil would result in a movement from

A) point a to point d.
B) point a to point c.
C) point a to point b.
D) point a to point e.

Question 12

The interaction of supply and demand explains

A) both the prices and the quantities of goods and services.
B) the quantities of goods and services but not their prices.
C) neither the prices nor the quantities of goods and services.
D) the prices of goods and services but not their quantities.

Question 13

If good growing conditions increase the supply of strawberries and hot weather increases the demand for strawberries, the quantity of strawberries bought

A) increases and the price rises.
B) increases and the price might rise, fall or not change.
C) doesn't change and the price falls.
D) doesn't change and the price rises.

Question 14

Twenty years ago a stove cost $300 and a refrigerator cost $1,500. Today a stove costs $600, while a refrigerator costs $1,800. Which of the following statements is true?

A) The relative price of stoves and refrigerators has not changed.
B) The money price of a refrigerator has fallen.
C) The relative price of a stove has increased.
D) The relative price of a refrigerator has increased.

Question 15

An increase in the number of suppliers in a market results in a

A) rightward shift in the supply curve.
B) movement up along the supply curve.
C) leftward shift in the supply curve.
D) Both answers A and C are correct.

Question 16

Which of the following is NOT held constant while moving along a supply curve?

A) Expected future prices
B) The number of sellers
C) Prices of factors of production
D) The price of the good itself

Question 17

Flights to Paris are a normal good and people's incomes rise. At the same time, the price of jet fuel rises. The equilibrium price of a flight to Paris _______ and the equilibrium quantity of flights to Paris _______.

A) might rise, fall or not change; increases
B) rises; increases
C) falls; decreases
D) rises; might increase, decrease or not change

Question 18

The figure above shows the demand for fruit snacks. Which movement reflects an increase in the price of a substitute for fruit snacks?

A) From point a to point c
B) From point a to point e
C) From point a to point b
D) From point a to point d

Question 19

The figure above shows supply curves for soft drinks. Suppose the economy is at point a. A movement to point c could be the result of

A) an increase in the relative price of a soft drink.
B) a decrease in technology.
C) a decrease in the relative price of a soft drink.
D) an increase in the money price of a soft drink.

Question 20

Bicycles are made out of steel. If the price of steel increases, there is a shift in the supply curve of bicycles that leads to

A) an increase in the price of a bicycle.
B) a permanent surplus of bicycles.
C) a temporary surplus of bicycles.
D) a shift in the demand curve for bicycles.

Question 21

Suppose we observe that both the equilibrium price of digital cameras and the equilibrium quantity of digital cameras have increased. Which of the following events could be responsible for this?

A) Consumers' preferences changed in favour of digital cameras.
B) Technological advances in digital camera production.
C) Workers who make digital cameras received a pay raise.
D) The price of film cameras fell.

Question 22

Suppose a market begins in equilibrium. If supply increases, then at the original equilibrium price the quantity demanded

A) is less than the quantity supplied and a shortage results.
B) exceeds the quantity supplied and a shortage results.
C) exceeds the quantity supplied and a surplus results.
D) is less than the quantity supplied and a surplus results.

Question 23

Leather belts and leather shoes are substitutes in production. If style changes increase the demand for leather belts, the supply curve of leather shoes will shift

A) leftward and the equilibrium price of leather shoes will rise.
B) leftward and the equilibrium price of leather shoes will fall.
C) rightward and the equilibrium price of leather shoes will fall.
D) rightward and the equilibrium price of leather shoes will rise.

Question 24

If a producer can use resources to produce either good A or good B, then A and B are

A) substitutes in production.
B) complements in production.
C) substitutes in consumption.
D) complements in consumption.

Question 25

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

A) an increase in the price of coffee decreases the quantity of tea demanded.
B) a decrease in the price of petrol decreases the quantity of petrol demanded.
C) an increase in the price of downloaded music decreases the demand for downloaded music.
D) an increase in the price of pizza decreases the quantity of pizza demanded.

Question 26

The figure above shows supply curves for soft drinks. Suppose the economy is at point a. An increase in the price of a soft drink is shown as a movement from point a to

A) none of the points that are illustrated.
B) point b.
C) point c.
D) point d.

Question 27

The quantity supplied of a good is

A) equal to the difference between the quantity available and the quantity desired by all consumers and producers.
B) the same thing as the quantity demanded at each price.
C) the amount the firm would sell if it faced no resource constraints.
D) the amount that the producers are planning to sell at a particular price during a given time period.

Question 28

The "law of demand" implies that demand curves

A) slope up.
B) shift rightward whenever the price rises.
C) shift leftward whenever the price rises.
D) slope down.

Question 29

Which of the following is consistent with the law of demand?

A) An increase in the price of a cola causes a decrease in the quantity of cola demanded.
B) A decrease in the price of juice causes no change in the quantity of juice demanded.
C) A decrease in the price of a litre of milk causes a decrease in the quantity of milk demanded.
D) An increase in the price of a DVD causes a decrease in the demand for DVDs.

Question 30

Consider the demand curves for soft drinks shown in the figure above. Suppose the economy is at point a. Which of the following could result in a movement to point d?

A) A decrease in income
B) A decrease in the price of bottled water
C) An increase in the relative price of a soft drink
D) A decrease in the relative price of a soft drink

Question 31

In a market, at the equilibrium price,

A) buyers are paying the minimum price they are willing to pay for any amount of output and sellers are charging the maximum price they are willing to charge for any amount of production.
B) neither buyers nor sellers can do business at a better price.
C) buyers are willing to pay a higher price, but sellers do not ask for a higher price.
D) None of the above is true.

Question 32

The quantity demanded is

A) the amount of a good that consumers plan to purchase at a particular price.
B) always equal to the equilibrium quantity.
C) independent of consumers' buying plans.
D) independent of the price of the good.

Question 33

Using the data in the above table, at the price of $80 a phone, a

A) shortage of 25,000 cellular telephones occurs.
B) shortage of 55,000 cellular telephones occurs.
C) surplus of 25,000 cellular telephones occurs.
D) surplus of 80,000 cellular telephones occurs.

Question 34

Which of the following influences people's buying plans and does NOT shift the demand curve?

A) The price of the good
B) The prices of related goods
C) Preferences
D) Income

Question 35

Which of the following correctly describes how price adjustments eliminate a shortage?

A) As the price rises, the quantity demanded decreases while the quantity supplied increases.
B) As the price falls, demand increases while supply decreases.
C) As the price falls, the quantity demanded decreases while the quantity supplied increases.
D) As the price rises, the quantity demanded increases while the quantity supplied decreases.

Question 36

Students can rent a Blu- ray movie at Campus Video for $4. As the price of Blu- ray players falls, the

A) quantity demanded of Blu- ray movies will increase.
B) quantity supplied of Blu- ray movies will decrease.
C) demand for Blu- ray movies will increase.
D) supply of Blu- ray movies will decrease.

Question 37

Coffee and sugar are complements. If a poor sugar harvest leads to an increase in the price of sugar, there will also be

A) a rightward shift in the demand curve for coffee.
B) a leftward shift of the supply curve of coffee.
C) a decrease in the price of coffee.
D) an increase in the price of coffee.

Question 38

The "law of supply" states that, other things remaining the same, firms produce

A) less of a good the more it costs to produce it.
B) more of a good the higher its price.
C) less of a good as the required resources become scarcer.
D) more of a good the less it costs to produce it.

Question 39

The above table shows the demand schedule and supply schedule for almond oil. If the price is
$4)00 per litre, there is a

A) shortage of 5 litres of almond oil.
B) shortage of 3 litres of almond oil.
C) shortage of 2 litres of almond oil.
D) surplus of 3 litres of almond oil.

Question 40

When the price of a pizza decreases from $14 to $12,

A) the income effect means that the demand for pizza will not change.
B) the income effect points out that the total purchasing power of people who buy pizza increases.
C) the income effect means people buy less pizza.
D) None of the above answers is correct.

Question 41

Long- distance travel by bus is an inferior good. As people's incomes increase and other things remain the same, you predict that the

A) demand for long- distance travel by bus will increase as the price of long- distance travel by bus falls.
B) demand for long- distance travel by bus will decrease and the price will rise.
C) price of long- distance travel by bus will fall.
D) price of long- distance travel by bus will fall and the demand for long- distance travel by bus will increase.

Question 42

Suppose a medical study reveals new benefits to consuming beef and at the same time a bumper corn crop reduces the cost of feeding cattle. The equilibrium price of beef will

A) fall.
B) rise.
C) stay the same.
D) perhaps rise, fall or stay the same, but more information is needed to determine which it does.

Question 43

The above table gives the demand and supply schedules for Blu- ray discs. Suppose that the price of a Blu- ray disc player increases, resulting in the demand for Blu- ray discs decreasing by 8,000 units at all prices. What are the new equilibrium quantity and equilibrium price of Blu- ray discs?

A) 16,000 and $16
B) 8,000 and $8
C) 20,000 and $20
D) 28,000 and $28

Question 44

When the price of a pizza decreases from $12 to $10, it is definitely the case that the

A) substitution effect means people buy more pizza.
B) income effect means people buy less pizza.
C) quantity demanded of pizza will not change.
D) None of the above answers is correct.

Question 45

Consider the demand curves for soft drinks shown in the figure above. Initially the economy is at point a. If people come to expect that the price of a soft drink will increase in the future, there will be a movement to a point such as

A) none of the points illustrated.
B) b.
C) c.
D) d.

Question 46

The price of a bag of corn chips is $3, and the price of a bottle of cola is $1. What is the relative price of a bottle of cola?

A) $3
B) 1/3 bag of corn chips per bottle of cola
C) 33¢
D) 3 bags of corn chips per bottle of cola

Question 47

Which of the following results in a movement along the supply curve of spinach but does not shift the supply curve of spinach?

A) An increase in wages for workers in spinach fields
B) Great weather that produces a bumper spinach crop this year
C) A rise in the price of spinach
D) Disastrous weather that destroys half of this year's spinach crop

Question 48

The demand curve for a normal good shifts leftward if income _______ or the expected future price _______.

A) decreases; rises
B) increases; falls
C) decreases; falls
D) increases; rises

Question 49

If both the demand and supply increase, the equilibrium quantity _______ and the equilibrium price _______.

A) increases; falls
B) decreases; rises
C) decreases; might rise, fall or not change
D) increases; might rise, fall or not change

Question 50

The quantity of iPods that people plan to buy this month depends on all of the following except the

A) price of a music download from iTunes.
B) technology used to produce an iPod.
C) price of CD players.
D) price of an iPod.

Question 51

If the quantity demanded exceeds the quantity supplied, then there is

A) a shortage and the price is below the equilibrium price.
B) a surplus and the price is below the equilibrium price.
C) a surplus and the price is above the equilibrium price.
D) a shortage and the price is above the equilibrium price.

Question 52

Which of the following increases the quantity supplied of good X but does NOT increase the supply of good X?

A) An advance in the technology for producing X
B) An increase in the price of X
C) A fall in the price of a factor production used to produce X
D) An increase in the price of good Y, a complement in the production of X

Question 53

Changes in which of the following shifts the supply curve of hamburgers?

A) New research that establishes a link between hamburgers and heart problems
B) An increase in the price of meat used to produce hamburgers
C) An economy- wide decrease in income because of a long recession
D) A rise in the price of cola, a complement for hamburgers

Question 54

Coffee and sugar are complements. If the supply curve of coffee shifts leftward because of poor weather, then there will be

A) an increase in the price of sugar.
B) a decrease in the price of sugar.
C) a leftward shift of the supply curve for sugar.
D) a leftward shift of the demand curve for coffee.

Question 55

The above figure shows the market for oil. Because of the development of a new deep sea drilling technology the

A) demand curve does not shift, and the supply curve shifts from S1 to S2.
B) demand curve does not shift, and the supply curve shifts from S2 to S1.
C) demand curve shifts from D1 to D2 and the supply curve shifts from S1 to S2.
D) demand curve shifts from D1 to D2 and the supply curve does not shift.

Question 56

A fall in the price of a good causes producers to reduce the quantity of the good they are willing to produce. This fact illustrates

A) a change in supply.
B) the law of demand.
C) the nature of an inferior good.
D) the law of supply.

Question 57

The "law of demand" refers to the fact that, all other things remaining the same, when the price of a good rises

A) there is a movement up along the demand curve to a smaller quantity demanded.
B) the demand curve shifts rightward.
C) the demand curve shifts leftward.
D) there is a movement down along the demand curve to a larger quantity demanded.

Question 58

The figure above shows the demand for fruit snacks. Which movement reflects an increase in demand?

A) From point a to point e
B) From point a to point d
C) From point a to point b
D) From point a to point c

Question 59

The above table shows the demand schedule and supply schedule for almond oil. An increase in consumers' income results in an increase in the demand for almond oil by an amount of 3 litres at every price. What are the new equilibrium quantity and equilibrium price?

A) 5 litres, $4.00 per litre
B) 5 litres, $5.00 per litre
C) 4 litres, $5.00 per litre
D) 5 litres, $6.00 per litre

Question 60

Suppose people buy more of good 1 when the price of good 2 falls. These goods are

A) complements.
B) inferior.
C) normal.
D) substitutes.

Question 61

A bakery can produce either cakes or cookies. If the price of cookies rises, then

A) the supply curve of cake shifts rightward.
B) there is a movement downward along the supply curve of cakes.
C) the supply curve of cake shifts leftward.
D) there is a movement upward along the supply curve of cakes.

Question 62

Consider the demand curves for soft drinks shown in the figure above. Moving from point a to point c means that

A) the marginal benefit of each additional soft drink falls.
B) the price of a soft drink has increased.
C) people's incomes have decreased.
D) the opportunity cost of another soft drink increases.

Question 63

Scarcity guarantees that

A) most demands will be satisfied.
B) wants will exceed demands.
C) demands will exceed wants.
D) demands will be equal to wants.

Question 64

In the figure above, which movement could be the result of an increase in the wages paid to oil workers?

A) Point a to point e
B) Point a to point b
C) Point a to point d
D) Point a to point c

Question 65

The above figure shows the market for pizza. Which figure shows the effect of an increase in the price of a complement such as cola?

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

Question 66

The above table gives the demand and supply schedules for Blu- ray discs. If the price of a Blu- ray disc is $8, there is a _______ and the price of a Blu- ray disc will _______.

A) shortage; fall
B) surplus; rise
C) surplus; fall
D) shortage; rise

Question 67

The opportunity cost of a good is the same as its

A) price index.
B) money price.
C) relative price.
D) None of the above.

Question 68

In the above figure, if D2 is the original demand curve and the price of a substitute in consumption rises, which price and quantity might result?

A) Point a, with price P2 and quantity Q2.
B) Point b, with price P1 and quantity Q1.
C) Point c, with price P3 and quantity Q3.
D) Point d, with price P1 and quantity Q3.

Question 69

The above figure shows the market for petrol. When a cyclone destroys a major refinery that refines oil into petrol, the

A) demand curve for petrol does not shift, and the supply curve of petrol shifts from S1 to S2.
B) demand curve for petrol does not shift, and the supply curve of petrol shifts from S2 to S1.
C) demand curve for petrol shifts from D1 to D2 and the supply curve of petrol does not shift.
D) demand curve for petrol shifts from D1 to D2 and the supply curve of petrol shifts from S2 to S1.

Question 70

When the price of a good is

A) above the equilibrium price, quantity demanded exceeds quantity supplied and price rises.
B) below the equilibrium price, quantity demanded exceeds quantity supplied and price falls.
C) below the equilibrium price, quantity supplied exceeds quantity demanded and price rises.
D) above the equilibrium price, quantity supplied exceeds quantity demanded and price falls.

Question 71

An increase in the price of jet fuel will _______ air flights and the equilibrium quantity of air flights will _______.

A) increase the demand for; increase
B) decrease the supply of; decrease
C) decrease the supply of; increase
D) decrease the demand for; decrease

Question 72

In the above figure, the equilibrium price is _______ and the equilibrium quantity is _______.

A) $8; 400 units
B) $6; 300 units
C) $4; 200 units
D) $2; 500 units

Question 73

Which of the following statements is correct?

A) When demand increases, both the price and the quantity increase.
B) When supply decreases, both the price and the quantity decrease.
C) When demand decreases, the price rises and the quantity decreases.
D) When supply increases, the quantity decreases and the price rises.

Question 74

If the price of crude oil falls, the equilibrium price of petrol _______ and the equilibrium quantity _______.

A) rises; increases
B) falls; increases
C) rises; decreases
D) falls; decreases

Question 75

Which of the following statements is true?

A) An increase in the price of petrol will increase the quantity supplied of petrol.
B) An increase in the price of petrol will decrease the demand for petrol.
C) An increase in the price of petrol will increase the quantity demanded of petrol.
D) An increase in the price of petrol will increase the supply of petrol.

Question 76

Which of the following will NOT shift the supply curve for pick- up trucks?

A) A technological advance
B) A change in the number of firms supplying pick- up trucks
C) An increase in the price of a resource used to produce pick- up trucks
D) A change in the price of pick- up trucks

Question 77

The price of cereal rises. As a result, people have cereal for breakfast on fewer days and eat eggs instead. This behaviour is an example of

A) a decrease in the quantity demanded of cereal because of the substitution effect.
B) a decrease in the quantity supplied of cereal because of the substitution effect.
C) an increase in the quantity demanded of eggs because of the income effect.
D) an increase in the quantity supplied of eggs because of the income effect.

Question 78

Which of the following is true?

A) An increase in population shifts the demand curve for most goods leftward.
B) If consumers expect the price of a good will rise in the future, the demand curve shifts leftward.
C) For an inferior good, when income increases, the demand curve shifts leftward.
D) The demand curve for a good shifts leftward when the price of a substitute rises.

Question 79

If the quantity of textbooks supplied is 10,000 per year and the quantity of textbooks demanded is 12,000 per year, there is a _______ in the market and the price will _______.

A) surplus; rise
B) shortage; fall
C) shortage; rise
D) surplus; fall

Question 80

An increase in technology for producing personal computers leads to

A) an increase in the demand for personal computers.
B) an increase in the supply of personal computers.
C) a decrease in the demand for personal computers.
D) a decrease in the supply of personal computers.