Deck 3: Demand and Supply

Question 1

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

A)consumers are willing and able to buy at a given price.(True Answer )Correct
B)firms are willing to sell during a given time period at a given price.
C)a consumer would like to buy but might not be able to afford.
D)a consumer needs to consume during a given time period.

Answer 1

A

Question 2

Quantity demanded is:

A)the amount of a good or service that a buyer is able and willing to purchase at a given price.
B)the amount of a good or service that a buyer is able and willing to sell at a given price.
C)the amount of a good or service that a seller is able and willing to sell at a given price.
D)the amount of a good or service that a buyer is able and willing to purchase at various given prices.

Answer 2

A

Question 3

(Figure: Willingness to Pay) Refer to the figure. What is themaximum amount that buyers are willing to buy at a price of$45 per book?

A)300 books
B)450 books
C)0 books
D)100 books

Answer 3

D

Question 4

What does the law of demand state?

A)As incomes increase, people consume more of all goods.
B)The demand for a good increases with the number of consumers in the market.
C)As the price of a good declines, consumers purchase more of that good.
D)The supply of a good increases in proportion to the demand for it.

Question 5

A)$4,500
B)$9,000
C)$18,000
D)$450

Question 6

Which of the following is TRUE about demand curves?

A)Demand curves are negatively sloped.
B)Demand curves reflect the law of demand.
C)Demand curves are plots of quantities demanded at various prices.
D)All of the answers are correct.

Question 7

(Figure: Earned Consumer Surplus) Refer to the figure. Themarket price of the product is $20 per unit. Calculate the dollaramount of consumer surplus being earned in this market.Figure: Earned Consumer Surplus

A)$120,000
B)$60,000
C)$100,000
D)$80,000

Question 8

What does the law of demand state?
I) There is a negative relationship between price and quantitydemanded
II)There is an inverse relationship between price and quantitythat buyers are willing and able to purchase
III) There is an inverse relationship between price and demand.

A)I and II only
B)II and III only
C)I and III only
D)I, II, and III

Question 9

The law of demand states that:

A)the lower the price, the greater the quantity demanded.
B)the higher the price, the higher the quantity demanded.
C)the demand curve is upward sloping.
D)an increase in income increases the quantity demanded.

Question 10

(Table: Sweetbrand) The table shows the maximum consumerwillingness to pay for "Sweetbrand" cheesecakes. Which of thefour consumers receives the smallest consumer surplus, if themarket price of the cheesecakes is $12.50 each?

A)Frodo
B)Sam
C)Mary
D)Pippin

Question 11

If the university president valued a parking space close to theadministration building at $500 and paid $30 for a parkingpermit, he would receive consumer surplus equal to:

A)$30.
B)$470.
C)$500.
D)$530.

Question 12

Which of the following statements correctly defines a demandcurve?

A)A demand curve is a function that shows the relationship between prices and the quantity available for sale.
B)A demand curve is a function that shows the relationship between prices and their associated quantities
Supplied.
C)A demand curve is a function that shows the relationship between prices and their associated quantities
Demanded.
D)A demand curve is a function that shows the relationship between quantity demanded and quantity supplied.

Question 13

A)$4.00
B)$2.50
C)$2.75
D)$4.25

Question 14

If Maria is willing to pay $50 for a sweatshirt, how muchconsumer surplus does she earn if the market price forsweatshirts is $27.50 each?

A)$27.50
B)$50.00
C)$77.50
D)$22.50

Question 15

A)$380
B)$415
C)$345
D)$5,145

Question 16

Recall the discussion about the demand for oil in your textbook.Which of the following correctly explains why the demandcurve for oil is negatively sloped?
As the price of oil rises:

A)consumers use oil for more and varied purposes.
B)consumers increasingly use oil only for those purposes without good substitutes.
C)consumers have an incentive to use oil more freely.
D)more producers are more willing and able to produce oil.

Question 17

Which of the following statements about consumer surplus isincorrect?

A)Consumer surplus is the net benefit to consumers from the exchange that occurs in a market.
B)Consumer surplus is the gains from trade on the part of the consumer that result from a market transaction.
C)Total consumer surplus is the area beneath the demand curve and above the market price.
D)Consumer surplus is the difference between the minimum price the consumer is willing to pay and the market
Price.

Question 18

(Figure: Demand Curve) Which of the following statements isTRUE regarding the figure?
I. At a price of $6 per unit, consumers are willing and able tobuy 10 units
II)The maximum price demanders are willing to pay for 15units is $3.75 per unit
III) The higher the price, the greater the quantity demanded.IV. At a price of $3.75 per unit, consumers are indifferentbetween buying 10 and 15 units.

A)I only
B)I and II only
C)I, II, and III
D)I, II, and IV

Question 19

(Figure: Demand Curve) Refer to the figure. What is themaximum price per book that buyers are willing to pay for 2,500 books?
Figure: Demand Curve

A)$60
B)$45
C)$30
D)$15

Question 20

(Table: Sweetbrand) The table shows the maximum consumerwillingness to pay for "Sweetbrand" cheesecakes. Which of thefour consumers receives the most consumer surplus, if themarket price of the cheesecakes is $12.50 each?

A)Frodo
B)Sam
C)Mary
D)Pippin

Question 21

Weather forecasters predict that a major winter storm willstrike your town within the next few days. Which of thefollowing would NOT occur based upon the expected storm?

A)an increase in the demand for groceries
B)a decrease in the supply of winter clothing (True Answer )Correct
C)an increase in the demand for gasoline and tire chains
D)an increase in the supply of electric generators to the area

Question 22

Which of the following are likely to be complements?

A)hotdogs and hamburgers
B)books and book-lights
C)coffee and tea
D)cars and vans

Question 23

If the price of shotguns ______, the demand for shotgun shellswill _______.

A)increases; decrease
B)increases; increase
C)decreases; decrease
D)double; double

Question 24

(Figure: Demand Shift) Which of the following factors wouldcause the change in the figure?
Figure: Demand Shift I. an increase in the price of a complement goodII. an increase in production costsIII. an increase in the price of a substitute goodIV. an increase in income for an inferior good

A)I and III only
B)II and IV only
C)III only
D)I, II, and III

Question 25

A)Consumer income increases in the market for a normal good.
B)Consumer income falls in the market for a normal good.
C)Consumer income rises in the market for an inferior good.
D)Consumer income falls in the market for a luxury good.

Question 26

If Romaine lettuce and Iceberg lettuce are substitutes, anincrease in the price of Romaine lettuce will ______ the demandfor Iceberg lettuce.

A)reduce
B)increase
C)not shift
D)decrease

Question 27

Michael graduates from college and his income increases by$40,000 a year. Other things held constant, he decreases thequantity of pizza he buys. For Michael, pizza is:

A)an inferior good.
B)a complement.
C)a substitute.
D)a normal good.

Question 28

As the population of elderly in the United States increases:

A)the supply and demand curves will both shift rightward.
B)the demand curve for certain products shifts rightward.
C)the supply curve will become vertical.
D)None of the answers is correct.

Question 29

If the price of computers ______, the demand for printers will______.

A)increases; increase
B)decreases; decrease
C)decreases; not change
D)increases; decrease

Question 30

The quantity of DVDs that people plan to buy this monthdepends on all of the following EXCEPT the:

A)price of DVDs.
B)price of movies for download.
C)population.
D)quantity of DVDs the sellers have stocked.(True Answer )Correct

Question 31

Mario buys eight units of good X when his income is $2,000 amonth. When his income increases to $2,700 per month, hebuys only six units of good X. For Mario, good X is:

A)a normal good.
B)an expensive good.
C)an inferior good.
D)a useless good.

Question 32

Which of the following does NOT shift the demand curve?

A)changes in the product's price
B)changes in income
C)changes in population
D)changes in tastes and preferences

Question 33

Assume that spaghetti is an inferior good for most people. Astheir incomes increase, all other things held constant, the:

A)demand for spaghetti will decrease shifting the demand curve to the left.
B)demand for spaghetti will decrease shifting the demand curve to the right.
C)demand for spaghetti will increase shifting the demand curve to the left.
D)demand for spaghetti will increase shifting the demand curve to the right.

Question 34

A local university decides to double its enrollment over the nextfive years in order to increase tuition revenue. Which of thefollowing would most likely occur in the market for rentalhousing in the surrounding community?

A)a decrease in the price of rental housing
B)an increase in the demand for rental housing (True Answer )Correct
C)a decrease in the supply of rental housing
D)a population change leads to a change in quantity demanded, not demand

Question 35

I. a decrease in the price of a complement goodII. a decrease in the price of the productIII. a decrease in the price of a substitute goodIV. an increase in taxes

A)I only
B)II only
C)I, II, and III only
D)I and IV only

Question 36

A decrease in income causes demand for a normal good to________, and an increase in income causes demand for aninferior good to ________.

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

Question 37

Which of the following are factors that shift the demand curve?

A)costs of production, price of the product, and subsidies
B)income, population, tastes, and input prices
C)expectations, opportunity costs, price of the product
D)price of substitutes, tastes, price of complements (True Answer )Correct

Question 38

Coke and Pepsi are substitute soft drinks. Which of thefollowing would cause the demand curve for Pepsi to shift to theleft?

A)A report emerges that shows that drinking Pepsi helps to promote weight loss.
B)The price of Coke decreases.
C)The price of Pepsi rises.
D)The cost of making Pepsi rises.

Question 39

Which one of the following choices would cause the demandcurve for an inferior good to shift to the left?

A)a fall in incomes
B)a fall in the price of the inferior good
C)a rise in incomes
D)a rise in the price of the inferior good

Question 40

Which of the following would cause the demand for hot dogbuns to increase?

A)a fall in the price of hot dog buns
B)a fall in the price of hot dogs
C)a rise in the price of hot dogs
D)a rise in the price of hot dog buns

Question 41

A)$65.25
B)$81.76
C)$87.75
D)$93.74

Question 42

The supply curve illustrates:

A)that limited resources are available for society to use.
B)the relationship between the quantity supplied and the price of a good.
C)the total cost of producing a good.
D)the willingness to produce a good if the technology to produce it becomes available.

Question 43

The quantity supplied is the:

A)amount of inputs that a firm earns profit on.
B)change in the sellers' output multiplied by the change in price.
C)incremental cost of producing one more unit of output, holding all other things constant.
D)amount of a good that firms are willing and able to sell at a particular price during a given period of time.(True Answer
)Correct

Question 44

(Figure: Supply Curve) Refer to the figure. A vertical readingof the figure indicates that:

A)at a price higher than $40, the quantity supplied drops to zero.
B)to produce 500 units suppliers must be paid at least $40 per unit.
C)at a price of $40 per unit, suppliers are willing and able to sell 500 units.
D)at a price lower than $40, the quantity supplied drops to zero.

Question 45

The movie trilogy The Lord of the Rings was hugely successful,and, as a result, the demand for fantasy novels, action figures,and online role-playing games surged. The increase in demandcan be explained by a(n):

A)increase in population.
B)change in expectations.
C)change in tastes.
D)change in the price of substitutes.

Question 46

(Table: Willingness to Sell) Refer to the table. Which country isearning the most producer surplus at a market price of $35 perbarrel of oil?

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

Question 47

A)the expectation of an outbreak of war in the world's best oil producing regions
B)the expectation of a reduction in the future supply of oil
C)the expectation that next week's oil prices will be substantially higher
D)All of the answers are correct.

Question 48

A)$5,000
B)$10,000
C)$100
D)$200

Question 49

(Figure: Producer Surplus) Refer to the figure. What is thechange in producer surplus if the price rises from $2 to $3 perunit?

A)$5
B)$10
C)$15
D)$20

Question 50

Suppose that Country X is a high-cost producer of oil andCountry Y is a low-cost producer of oil. The citizens of CountryX use both oil produced in their own country as well as oilproduced in Country Y. If the market price of oil decreases, oilproduction in Country X will _______, and the citizens ofCountry X will _________________.

A)decrease; purchase a larger fraction of their oil from Country Y
B)increase; purchase a larger fraction of their oil from Country X
C)decrease; not change their consumption mix between imported and domestic oil
D)increase; purchase a smaller fraction of their oil from Country Y

Question 51

A)$800
B)$1,600
C)$2,400
D)$1,200

Question 52

Which of the following could cause an increase in the demandfor gasoline?

A)the resolution of a civil war in one of the world's biggest oil producing nations
B)the expectation that the price of gasoline will decrease in the future
C)a new technology that makes the production of gasoline significantly less expensive
D)an approaching hurricane that threatens a major oil refinery in Texas

Question 53

Figure: Producer Surplus (Figure: Producer Surplus) Refer to the figure. What is theproducer surplus at a price of $2 per unit?

A)$5
B)$6
C)$10
D)$20

Question 54

Suppose it is widely believed that the price of flat-screen, high-definition televisions will be lower next year. What will happenas a result of such beliefs?

A)The demand for flat-screen TVs will increase now.
B)The demand for flat-screen TVs will increase next year when the prices fall.
C)The demand for flat-screen TVs will decrease now.(True Answer )Correct
D)The demand for flat-screen TVs will not change.

Question 55

Suppose that consumers begin to believe that the price ofhousing will be lower next period. What will happen in themarket for housing as a result of these expectations?

A)Nothing will happen yet.Consumers will wait for the price to actually decrease before changing their behavior.
B)Demand for housing will increase, causing the price of housing to increase rather than fall.
C)Demand for housing will begin to fall, and the price of housing will decrease.
D)Demand for housing will begin to rise as investors believe they are getting a "deal."

Question 56

(Table: Willingness to Sell) Refer to the table. Which country isearning the least amount of producer surplus at a market priceof $52 per barrel of oil?

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

Question 57

The quantity of cell phones that firms plan to sell this monthdepends on all of the following EXCEPT the:

A)number of producers of cell phones.
B)price of a cell phone.
C)wages of workers in electronics factories.
D)All of these choices affect market conditions.(True Answer )Correct

Question 58

New research indicates that running marathons is actually badfor the heart (it increases inflammatory markers associatedwith heart attacks). This news will:

A)lead to a decrease in the demand for running shoes.(True Answer )Correct
B)have no effect on the demand or supply of running shoes.
C)increase the supply of running shoes.
D)lead to an increase in the demand for running shoes.

Question 59

The quantity supplied of oil is the amount that:

A)producers plan to sell during a given time period at a given price.
B)is actually bought during a given time period at a given price.
C)producers wish they could sell at a higher price.
D)people are willing to buy during a given time period at a given price.

Question 60

What does the law of supply state?

A)There is a positive relationship between price and quantity supplied.
B)There is a negative relationship between price and quantity supplied.
C)When prices rise, suppliers sell more.
D)When prices rise, buyers buy less of the product.

Question 61

In the market for fertilizer, an:

A)increase in the wage rate will increase the demand for fertilizer.
B)advance in technology will increase the supply of fertilizer.
C)increase in the wage rate will increase the supply of fertilizer.
D)increase in the cost of equipment will increase the supply of fertilizer.

Question 62

One result of the North American Free Trade Agreement wasa:

A)rise in the price of lumber in the United States due to the entry of Canadian lumber companies into U.S.
Markets.
B)decrease in the price of lumber in the United States due to the entry of Canadian lumber companies into U.S.markets.(True
Answer )Correct
C)rise in the price of lumber in the United States due to the exit of Canadian lumber companies from U.S.markets.
D)decrease in the price of lumber in the United States due to the exit of Canadian lumber companies from U.S.
Markets.

Question 63

Figure: Supply Shifts (Figure: Supply Shifts) In the figure, the initial supply curve isS₁. Producers engage in market speculation with the belief thatthe price of the good will increase in the near future. Thiswould be represented in the figure by shifting the:

A)supply curve to S₂, resulting in a lower quantity supplied at each price.
B)supply curve to S₂, resulting in a higher quantity supplied at each price.
C)supply curve to S₃, resulting in a lower quantity supplied at each price.
D)supply curve to S₃, resulting in a higher quantity supplied at each price.

Question 64

Firms are willing and able to sell 100 guitars per day at a priceof $250 per guitar. What price will firms require to sell 100guitars per day if there is a tax of $15 per guitar?

A)$235
B)$250
C)between $235 and $250
D)$265

Question 65

(Figure: Lobster Market) In the figure, a $10 tax is imposed onthe market for lobsters. What is the market price that lobsterproducers would need to receive to induce them to produce 5,000 bushels of lobster per day?

A)$50
B)$40
C)unknown
D)$60

Question 66

If producers form expectations that copper prices will be higherin the future, then this will shift the:

A)demand curve for copper to the left.
B)supply curve of copper to the right.
C)demand curve for copper to the right.
D)supply curve of copper to the left.

Question 67

Potato chips and popcorn are substitutes. A subsidy for potatochips will ______the demand for popcorn and the quantity ofpopcorn sold will ______.

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

Question 68

The price of coffee has increased, yet evidence suggests thedemand for coffee has been stable. A possible explanation isthat:

A)there has been no change in the supply of coffee.
B)there has been increased use of subsidies in coffee production.
C)wages of workers in coffee production might have decreased.
D)wages of workers in coffee production might have increased.

Question 69

A subsidy is a:

A)reverse tax.
B)means of shifting the supply curve left.
C)form of tax benefit.
D)movement along the supply curve.

Question 70

In the early 1980s, movie rentals averaged $5 a night; by theearly 1990s that average was $1 per night. This is an example ofa supply curve shifter based on:

A)a change in tastes and preferences.
B)a decrease in the wages of workers in the video rental stores.
C)an increase in the number of VRCs owned by consumers.
D)the entry of new suppliers into the market.(True Answer )Correct

Question 71

(Figure: Supply Shift) According to the figure, the:Figure: Supply Shift

A)costs of producing output have decreased.
B)technology for producing output have improved.
C)costs of producing output have increased.
D)price of the product decreased.

Question 72

In the oil market, an increase in the wage of oil workers will:

A)shift the supply curve of oil to the right.
B)shift the supply curve of oil to the left.
C)shift the demand curve for oil to the left.
D)shift the demand curve for oil to the right.

Question 73

(Figure: Supply Shifts) In the figure, the initial supply curve isS₁. If producers form expectations that the price will be lowerin the near future, S₁ will:

A)shift to S₂.
B)shift to S₃.
C)not shift.
D)not shift, although the price of the good will decrease today.

Question 74

Which of the following factors does NOT result in a shift of thesupply curve?

A)a change in the number of sellers in the market
B)a change in the demand for the product (True Answer )Correct
C)a change in production technology
D)a change in the costs of production

Question 75

A government subsidy causes the:

A)supply of the product to increase.
B)supply of the product to decrease.
C)supply curve to change slope.
D)supply curve to shift up and to the left.

Question 76

A firm produces volleyballs and soccer balls. What happens tothe supply of soccer balls if the market price of volleyballsincreases?

A)The opportunity cost of producing soccer balls rises, so the supply curve of soccer balls increases.
B)The opportunity cost of producing soccer balls falls, so the supply curve of soccer balls decreases.
C)The opportunity cost of producing soccer balls rises, so the supply curve of soccer balls decreases.
D)The opportunity cost of producing soccer balls falls, so the supply curve of soccer balls increases.

Question 77

A)I and II only
B)II and IV only
C)I, III, and V only
D)II, IV, and V only

Question 78

Which of the following factors causes a decrease in supply?

A)a decrease in demand
B)a decrease in the price of the product
C)an increase in the price of the product
D)new taxes on output

Question 79

Which of the following choices contains only factors that causethe supply curve to shift to the right?

A)a fall in production costs, a rise in technology, an increase in taxes on output
B)a fall in tastes and preferences for the product, economic growth, and a rise in technology
C)a decrease in taxes on production, a fall in subsidies on production, a rise in costs of production
D)a rise in technology, a fall in the costs of production, a fall in taxes on output

Question 80

New production technology in the manufacture of plasmatelevision screens has reduced the number of defective screens.What effect will this have in the market for plasma televisions?

A)The demand curve will increase.
B)The supply curve will increase.
C)The demand and supply curve both increase.
D)The demand curve will decrease.