Deck 2: Supply and Demand

Question 1

According to the Law of Demand, the demand curve for a good will

A)shift leftward when the price of the good increases.
B)shift rightward when the price of the good increases.
C)slope downward.
D)slope upward.

Answer 1

slope downward.

Question 2

The quantity demanded for a good

A)must equal the quantity actually sold.
B)can be less than the quantity actually sold.
C)can be greater than the quantity actually sold.
D)is always greater than the quantity actually sold.

Answer 2

can be greater than the quantity actually sold.

Question 3

If the price of automobiles were to decrease substantially, the demand curve for public transportation would most likely

A)shift rightward.
B)shift leftward.
C)remain unchanged.
D)remain unchanged while quantity demanded would change.

Answer 3

shift leftward.

Question 4

A downward sloping demand curve indicates that

A)individuals all have the same valuation of the same product.
B)individuals have different valuations of the same product.
C)individuals have no valuations of a particular product.
D)certain individuals are uninformed about certain aspects of the product.

Question 5

An increase in consumer incomes will lead to

A)a rightward shift of the demand curve for plasma TVs.
B)a movement upward along the demand curve for plasma TVs.
C)a rightward shift of the supply curve for plasma TVs.
D)no change of the demand curve for plasma TVs.

Question 6

Consumers have been buying fewer CDs as downloadable music has become easier to purchase and use. We would represent this as

A)a leftward shift of the demand curve for CDs.
B)a rightward shift of the demand curve for CDs.
C)a change in the price of CDs.
D)a leftward shift of the supply curve for downloadable music.

Question 7

The CB radio was very popular in the 1970s and 1980s for communicating while driving. People bought them because other drivers had them too and they could therefore talk with many others on their trips. This illustrates

A)that the demand curve for CB radios was inelastic.
B)the network effect.
C)that CB radios and gasoline are complementary goods.
D)the effects of mobile phones on the demand curve for CB radios.

Question 8

Which of the following would NOT change demand?

A)the price of the product
B)information about the product's health effects
C)the income of the consumers
D)the price of related products

Question 9

If the price of automobiles were to increase substantially, the demand curve for gasoline would most likely

A)shift leftward.
B)shift rightward.
C)remain unchanged.
D)become steeper.

Question 10

If the price is $5 and the quantity demanded is 100 units, then at a price of $10, the quantity demanded will be

A)less than or equal to 100 units.
B)greater than or equal to 100 units.
C)greater than quantity supplied.
D)equal to 100 units.

Question 11

If the price of automobiles were to decrease substantially, the demand curve for pizza would most likely

A)shift rightward.
B)shift leftward.
C)remain unchanged.
D)remain unchanged while quantity demanded would change.

Question 12

The law of demand

A)was passed by the 102nd U.S. Congress.
B)is a natural law, much like the law of gravity.
C)is considered a "law" in economics because of the overwhelming empirical evidence that supports its logic.
D)is considered a "law" in economics in order to force economic models to operate fully.

Question 13

If a demand curve shifts left, it implies

A)as a group, consumers are willing and able to pay less for the product.
B)as a group, consumers are willing and able to pay more for the product.
C)government has regulated how many people can purchase the product.
D)the profit motive of the firms is making the price too high.

Question 14

Recently, many cities have attempted to pass laws taxing the sale of sugary drinks such as soda pop. If one of these laws passes, we would expect

A)the supply curve for soda pop to shift to the right.
B)the supply curve for soda pop to become more vertical.
C)the demand curve for soda pop to shift to the right.
D)the demand curve for soda pop to shift to the left.

Question 15

Which of the following cultural events likely increased the demand for the product highlighted in the event?

A)the banning of cigarette advertising on television
B)the inclusion of Reese's Pieces in the movie E.T.
C)increased environmental awareness about the impacts of sport utility vehicles (SUVs)
D)concerns over "Mad Cow" disease in beef

Question 16

If a yet-to-be released video game receives a positive review in a popular gaming magazine, what happens to the demand curve for the video game?

A)The demand curve is expected to shift to the right.
B)The demand curve is expected to shift to the left.
C)The demand curve is not expected to change.
D)For those who read the review, demand shifts to the left. For those who don't read the review, demand shifts to the right.

Question 17

Assume Joe is only willing to pay $5 for a Ferrari sports car.

A)Joe is not considered part of the demand for Ferraris.
B)Joe won't be sold a Ferrari.
C)Joe is not considered rational.
D)Joe's willingness to pay is not indicative of how much he values the Ferrari.

Question 18

If a city were to ban the use of automobiles within its city limits, we would expect

A)the demand curve for automobiles to shift to the left.
B)people to move to another city.
C)the demand curve for bicycles to shift to the left.
D)the demand curve for automobiles to remain the same.

Question 19

As people have become more health-conscious and decided to eat food that is better for them

A)the demand curve for scooters has shifted to the right.
B)the demand curve for cupcakes has shifted to the right.
C)the demand curve for oranges and apples has shifted to the right.
D)None of the above.

Question 20

An individual who is only willing to pay a relatively low amount for a particular good

A)would fall in the upper portion of the demand curve.
B)would fall in the middle portion of the demand curve.
C)would fall in the lower portion of the demand curve.
D)would not be considered part of the demand curve.

Question 21

Government regulations

A)have no impact on supply.
B)only change the quantity supplied, not the supply curve.
C)are generally ineffective due to lobbying by suppliers.
D)can change both quantity supplied as well as the supply curve.

Question 22

An increase in the price of pork will lead to

A)a movement up along the demand curve.
B)a movement down along the demand curve.
C)a rightward shift of the demand curve.
D)a leftward shift of the demand curve.

Question 23

A increase in quantity demanded as a result of a change in price

A)is a rightward shift of the demand curve.
B)is a leftward shift of the demand curve.
C)leaves the demand curve unchanged.
D)is not possible.

Question 24

If the price of automobiles were to increase substantially, the demand curve for automobiles would most likely

A)shift rightward.
B)shift leftward.
C)remain unchanged.
D)become steeper.

Question 25

If the price of a pizza were to increase to $50, many people would give up eating pizza while others would continue to eat it. This would indicate

A)those who are buying pizza value it at least $50 per pizza.
B)those who are not buying pizza value it more than $50 per pizza.
C)only those who are extremely wealthy are buying pizza.
D)the price of pizza needs to be regulated by the federal government.

Question 26

The supply curve is influenced by

A)the income of consumers.
B)the number of customers in the market.
C)the prices of the inputs required to produce the product.
D)the price of the product being produced.

Question 27

Holding all other factors constant, consumers demand more of a good the

A)higher its price.
B)lower its price.
C)steeper the downward slope of the demand curve.
D)steeper the upward slope of the demand curve.

Question 28

A change in a relevant factor other than the price of the good itself causes a ________ the demand curve, and a change in a good's own price causes a ________ the demand curve.

A)shift of; shift of
B)shift of; movement along
C)movement along; shift of
D)movement along; movement along

Question 29

Suppose the demand for a particular product can be expressed as Q = 100/p. Calculate the total amount spent on this good when p = 10, 20, and 50. Can you make a generalization about the mathematical form of this demand curve and consumer behavior in this market?

Question 30

The above figure shows a graph of the market for pizzas in a large town. No pizzas will be demanded unless price is less than

A)$0.
B)$5.
C)$12.
D)$14.

Question 31

As the price of a good increases, the change in the quantity demanded can be shown by

A)shifting the demand curve leftward.
B)shifting the demand curve rightward.
C)moving down along the same demand curve.
D)moving up along the same demand curve.

Question 32

The above figure shows a graph of the market for pizzas in a large town. If the price falls from $10 to $7 per pizza, the quantity of pizzas demanded will

A)increase by 20.
B)decrease by 30.
C)increase by 30.
D)decrease by 10.

Question 33

To determine the total demand for all consumers, sum the quantity each consumer demands

A)at a given price.
B)at all prices and then sum this amount across all consumers.
C)Both A and B will generate the same total demand.
D)None of the above.

Question 34

Which of the following is NOT possible according to the law of demand?

A)a horizontal demand curve
B)a vertical demand curve
C)a downward-sloping supply curve
D)an upward-sloping demand curve

Question 35

If a good is not produced, then there is no demand for it.

Question 36

Technological innovation in the production of computers has led to

A)a decrease in the quantity demanded for computers.
B)a rightward shift of the supply curve for computers.
C)a decrease in the quantity supplied of computers.
D)None of the above.

Question 37

The quantity of a good that consumers demand depends only on the price of the good.

Question 38

Assume the price of a movie is $10. Jenna demands 2 movies per week, Sam demands 3 movies per week, and Jordan demands 8 movies per week. From this information we can conclude that

A)the market quantity demanded at a price of $10 is at least 13 movies per week.
B)Jordan is obviously more wealthy than either Sam or Jeanna.
C)Sam is irrational compared to Jenna or Jordan.
D)the movie industry is unprofitable.

Question 39

The price of crude oil rose to over $100 per barrel in early 2013. What would we expect to see happen to the supply of plastic, which is produced using crude oil?

A)The supply of plastic will increase.
B)The supply of plastic will decrease.
C)The supply of plastic will stay the same because the government requires plastic producers to meet statutory minimum production levels.
D)The supply of plastic will stay the same because of the profit motives of plastic producers.

Question 40

The supply curve

A)represents the quantity supplied at any given price.
B)represents the quantity actually sold at any given price.
C)is the opposite of the demand curve.
D)always intersects the demand curve.

Question 41

The above figure shows a graph of the market for pizzas in a large town. No pizzas will be supplied unless the price is above

A)$0.
B)$5.
C)$12.
D)$14.

Question 42

The market supply curve is found by

A)horizontally summing all individual supply curves at a price.
B)vertically summing all individual supply curves at a quantity.
C)either A or B above since they both give the same answer.
D)None of the above.

Question 43

Suppose the following information is known about a market:
1. Sellers will not sell at all below a price of $2.
2. At a price of $10, any given seller will sell 10 units.
3. There are 100 identical sellers in the market.
Assuming a linear supply curve, use this information to derive the market supply curve.

Question 44

The figure above shows a graph of the market for pizzas in a large town. What characterizes the equilibrium in this market?

A)There is excess supply at the equilibrium price of $7.
B)The government has selected the appropriate price for pizzas.
C)The quantity supplied equals the quantity demanded.
D)Supply equals demand.

Question 45

If the supply curve of a product changes so that sellers are now willing to sell 2 additional units at any given price, the supply curve will

A)shift leftward by 2 units.
B)shift rightward by 2 units.
C)shift vertically up by 2 units.
D)shift vertically down by 2 units.

Question 46

The above figure shows a graph of the market for pizzas in a large town. At a price of $14, there will be

A)no pizzas supplied.
B)equilibrium.
C)excess supply.
D)excess demand.

Question 47

The above figure shows a graph of the market for pizzas in a large town. At a price of $5, there will be

A)excess demand.
B)excess supply.
C)equilibrium.
D)zero demand.

Question 48

Suppose there are 100 identical firms in the rag industry, and each firm is willing to supply 10 rags at any price. The market supply curve will be a

A)vertical line where Q = 10.
B)vertical line where Q = 100.
C)vertical line where Q = 1000.
D)horizontal line where Q = 1000.

Question 49

Equilibrium is defined as a situation in which

A)neither buyers nor sellers want to change their behavior.
B)no government regulations exist.
C)demand curves are perfectly horizontal.
D)suppliers will supply any amount that buyers wish to buy.

Question 50

The Law of Supply states

A)that supply curves slope upward.
B)that supply curves can be vertical or horizontal.
C)Both A and B.
D)None of the above.

Question 51

A market is said to "clear" when

A)sellers give up selling their goods because they can't find any buyers.
B)buyers and sellers are able to buy and sell as much as they want at the market price.
C)the government decides to shut it down.
D)sellers run out of goods to sell.

Question 52

An increase in the price of oil will

A)shift the supply curve of oil to the left.
B)shift the supply curve of oil to the right.
C)leave the supply curve of oil unchanged.
D)Not enough information to answer the question.

Question 53

Once an equilibrium is achieved, it can persist indefinitely because

A)shocks that shift the demand curve or the supply curve cannot occur.
B)shocks to the demand curve are always exactly offset by shocks to the supply curve.
C)the government never intervenes in markets at equilibrium.
D)in the absence of supply/demand shocks no one applies pressure to change the price.

Question 54

A market equilibrium occurs

A)only with government regulation.
B)only because of the profit motive of firms.
C)only because of the complacency of consumers.
D)through the interaction of self-interested consumers and producers.

Question 55

Supply curves

A)slope upward.
B)slope downward.
C)are horizontal.
D)can have many shapes.

Question 56

At equilibrium, quantity sold equals the quantity bought. This implies that

A)to sell more, producers require more in payment than consumers are willing to pay.
B)government regulation is necessary.
C)to sell less would require a lower price but would yield greater profit.
D)those who don't buy have been treated unfairly.

Question 57

The above figure shows a graph of a market for pizzas in a large town. At a price of $7, what is the amount of excess demand?

A)0; there is excess supply at $7.
B)20 units
C)30 units
D)10 units

Question 58

The expression "increase in quantity supplied" is illustrated graphically as a

A)leftward shift in the supply curve.
B)rightward shift in the supply curve.
C)movement up along the supply curve.
D)movement down along the supply curve.

Question 59

The above figure shows a graph of the market for pizzas in a large town. What are the equilibrium price and quantity?

A)p = 8, Q = 60
B)p = 7, Q = 40
C)p = 7, Q = 70
D)p = 10, Q = 40

Question 60

Suppose the demand curve for a good shifts rightward, causing the equilibrium price to increase. This increase in the price of the good results in

A)a rightward shift of the supply curve.
B)an increase in quantity supplied.
C)a leftward shift of the supply curve.
D)a downward movement along the supply curve.

Question 61

If Qs = -20 + 10p, and Qd = 400 - 20p, what is the equilibrium price?

A)14
B)42
C)12.67
D)38

Question 62

If the price of a good is initially below the equilibrium level

A)the supply curve will shift leftward.
B)the supply curve will shift rightward.
C)firms supply none of the good.
D)excess demand exists.

Question 63

Suppose a market were currently at equilibrium. A rightward shift of the supply curve would cause a(n)

A)increase in price but a decrease in quantity.
B)decrease in price but an increase in quantity.
C)increase in both price and quantity.
D)decrease in both price and quantity.

Question 64

Explain why the equilibrium price is called the market clearing price.

Question 65

The above figure shows a graph of a market for pizzas in a large town. At a price of $10, the market

A)is not in equilibrium.
B)has excess supply.
C)does not have excess demand.
D)All of the above.

Question 66

According to Adam Smith's invisible hand

A)markets need the government to intervene.
B)forces are constantly pushing markets out of equilibrium
C)people coordinate their activities, resulting in equilibrium in the market.
D)there is an invisible glove that restricts what markets can do.

Question 67

If pizza and tacos are substitutes, a decrease in the price of tacos would lead to a

A)decrease in the demand curve for pizza.
B)decrease in the quantity demanded of pizza.
C)decrease in the price of pizza.
D)All of the above.

Question 68

A leftward shift of the supply curve will lead to a(n)

A)increase in equilibrium price.
B)excess demand at the old equilibrium price.
C)decrease in quantity demanded.
D)All of the above.

Question 69

When an imported good has restrictions are placed on it that limits the amount that can be imported and as a result the price of the good increases, the demand curve for that good will

A)shift rightward.
B)shift leftward.
C)become steeper.
D)be unaffected.

Question 70

A rightward shift of the supply curve will lead to a(n)

A)decrease in equilibrium price.
B)excess supply at the old equilibrium price.
C)increase in quantity demanded.
D)All of the above.

Question 71

In some markets, ________ act to adjust the price to bring the market into equilibrium.

A)bulls
B)regulators
C)market makers
D)web sites

Question 72

If Qs = -20 + 10p, and Qd = 400 - 20p, what is the equilibrium quantity?

A)440
B)146.6
C)360
D)120

Question 73

A competitive equilibrium is described by

A)a price only.
B)a quantity only.
C)the excess supply minus the excess demand.
D)a price and a quantity.

Question 74

If price is initially above the equilibrium level

A)the supply curve will shift rightward.
B)the supply curve will shift leftward.
C)excess supply exists.
D)all firms can sell as much as they want.

Question 75

Suppose a market were currently at equilibrium. A rightward shift of the demand curve would cause

A)an increase in price but a decrease in quantity.
B)a decrease in price but an increase in quantity.
C)an increase in both price and quantity.
D)a decrease in both price and quantity.

Question 76

When a market is in disequilibrium consumers and producers change their behavior. As a result the market reaches equilibrium.

Question 77

After tickets for a major sporting event are purchased at the official box office price, a market often develops whereby these tickets sell at prices well above the official box office price. Which of the following scenarios would NOT be able to explain this result?

A)The official price was below equilibrium from the moment the tickets were available.
B)Increased publicity causes the demand curve for the event to shift rightward.
C)The event was not a sellout.
D)Not everyone who wanted a ticket was able to buy one at the box office.

Question 78

A leftward shift of the demand curve will lead to a(n)

A)decrease in equilibrium price.
B)excess supply at the old equilibrium price.
C)decrease in quantity supplied.
D)All of the above.

Question 79

A rightward shift of the demand curve will lead to a(n)

A)increase in equilibrium price.
B)excess demand at the old equilibrium price.
C)increase in quantity supplied.
D)All of the above.

Question 80

From the 1970s through the 1990s, the relative price of a college education has increased greatly. During the same time period, college enrollment has also increased. This evidence suggests that during this time period

A)the demand curve for a college education has shifted leftward.
B)the demand curve for a college education has shifted rightward.
C)the supply curve for a college education has shifted leftward.
D)the supply curve for a college education has shifted rightward.