Deck 4: Demand and Supply

Question 1

eBay

A)is a market because buyers and sellers are brought together to buy and sell.
B)would be a market if there were only one physical location.
C)will be considered a market when the internet firms are profitable.
D)is not a market because buyers can buy from only one seller at any point in time.
E)cannot function as a market.

Answer 1

A

Question 2

If the demand for used cars decreases after the price of a new car falls,used cars and new cars are

A)normal goods.
B)complementary goods.
C)inferior goods.
D)substitute goods.
E)The question is incorrect because it is the quantity of used cars,NOT the demand for used cars,that will change when the price of a new car falls.

Answer 2

D

Question 3

In a competitive market,an individual ________ has ________ influence over the market price of the good or service being sold.

A)seller;basically no
B)buyer;basically no
C)buyer;a great deal of
D)seller;a great deal of
E)Both A and B are correct.

Answer 3

E

Question 4

In stores,it is common to find seasonal products marked down when the season ends.What explains this behaviour?

A)The store is trying to sell the goods and realises that they are substitutes for other goods whose prices have risen.
B)The store is trying to increase its consumers' incomes by increasing their purchasing power.
C)The law of demand is being used to increase the quantity demanded.
D)The store is trying to increase its customers' demand for the product.
E)The store manager must be trying to drive away customers by selling low quality products.

Question 5

Milk prices increase by 50 per cent and other things remain the same.As a result,there is

A)an increase in the demand for milk.
B)More information is needed to determine if the demand for milk increases or decreases.
C)no change in the quantity of milk demanded.
D)a decrease in the demand for milk.
E)a decrease in the quantity of milk demanded.

Question 6

The law of demand refers to how

A)the quantity demanded changes when the demand for the good changes.
B)demand changes when people's incomes change.
C)demand changes when the prices of substitutes and complements change.
D)the quantity demanded changes when the price of the good changes.
E)the price of the good changes when people's demand for the good changes.

Question 7

The price of cotton clothing falls.As a result,

A)the demand for cotton clothing increases.
B)the quantity demanded of cotton clothing decreases.
C)the demand for cotton clothing decreases.
D)both the demand for cotton clothing increases and the quantity demanded of cotton clothing increases.
E)the quantity demanded of cotton clothing increases.

Question 8

When demand increases,

A)consumers are willing to buy more at any price.
B)consumers buy more of the good only if its price falls.
C)the price is lower at any level of quantity demanded.
D)the demand curve shifts leftward.
E)consumers buy more of the good only if its price rises.

Question 9

Demand curves slope ________ because as the price increases and other things remain the same,the quantity demanded ________.

A)downward;increases
B)downward;decreases
C)upward;decreases
D)upward;increases
E)downward;does not change

Question 10

The law of demand asserts that,all else being equal,if the price of a good ________,the quantity demanded of that good ________.

A)rises;stays the same
B)stays the same;decreases
C)falls;increases
D)falls;decreases
E)None of the above is correct.

Question 11

What is the "quantity demanded"?

A)The amount of a good,service or resource people are willing and able to buy during a specific time period and at a given price.
B)The amount of a good or service people are able and willing to buy at all possible prices.
C)The amount of a good,service or resource people desire.
D)The minimum amount of a good,service or resource that people are willing to buy during a specific time period and at a given price.
E)The maximum amount of a good,service or resource that can be consumed during a specific time period.

Question 12

Which of the following statements is true about a competitive market? A competitive market

A)includes markets for goods and services but not for inputs.
B)has one seller competing to sell his or her product.
C)must have a physical location.
D)has so many buyers and sellers that no one can influence the price.
E)has only a handful of sellers but always has many buyers.

Question 13

Which of the following results in a movement upward along the demand curve for movies?

A)An increase in income,assuming that movies are a normal good
B)A decrease in income,assuming that movies are a normal good
C)An increase in the price of movie tickets
D)A decrease in the price of Netflix,a substitute for movies
E)A decrease in the price of movie tickets

Question 14

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

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

Question 15

A demand schedule shows

A)the quantities that people would plan to buy if they could afford them at each different price when all other influences on buying plans remain the same.
B)the quantities that people plan to buy in all possible circumstances.
C)the quantities that people plan to buy at each different income when all other influences on buying plans remain the same.
D)the quantities that people plan to buy at each different price as long as producers are willing to supply that quantity.
E)the quantities that people plan to buy at each different price when all other influences on buying plans remain the same.

Question 16

The phrase "a change in demand" refers to a

A)movement along the price curve.
B)shift of the demand curve.
C)change in the quantity demanded of a good.
D)movement along the quantity curve.
E)movement along a demand curve.

Question 17

A change in the demand for apples could result from any of the following EXCEPT

A)a change in income.
B)a change in the number of buyers.
C)a change in the price of an apple.
D)a change in the price of a banana.
E)increased preferences for fresh fruit consumption for health reasons.

Question 18

Assume that the market for petrol is perfectly competitive.When one additional seller (petrol station)enters the market,

A)then at least one other seller must exit the market.
B)the price of petrol decreases.
C)the price of petrol increases.
D)the price of petrol is left unaffected.
E)None of the above is correct.

Question 19

The downward slope of a demand curve

A)represents the law of demand.
B)indicates how the quantity demanded changes when incomes rise and the good is a normal good.
C)indicates how demand changes when the price changes and the good is a normal good.
D)indicates how demand changes when incomes rise and the good is a normal good.
E)shows that,as the price of a good rises,consumers increase the quantity they demand.

Question 20

The Australian Dairy Industry launches a new advertising campaign that makes most people want to drink more milk.As a result,

A)the quantity demanded of milk increases.
B)the demand for milk decreases because the price of milk rises.
C)the price of milk falls to encourage people to drink more milk.
D)the demand for milk increases.
E)the demand for milk is not affected.

Question 21

What happens to the demand for a good if a complement's price increases?

A)The demand increases and the demand curve shifts leftward.
B)The demand decreases and the demand curve shifts rightward.
C)The demand increases and the demand curve shifts rightward.
D)The demand decreases and the demand curve shifts leftward.
E)There is no impact on demand for the good and the demand curve does not shift.

Question 22

Which of the following shifts the demand curve for movies rightward?

A)An increase in the price of HDTV sets
B)An increase in the price of Netflix,a substitute for movies
C)A decrease in the price of move tickets
D)An increase in movie star salaries
E)An increase in the price of movie tickets

Question 23

Suppose that tattoos gained immense popularity with retired people as well as college students.This gain in popularity best reflects which of the following influences on buying plans?

A)Preferences
B)The price of a substitute good
C)Income
D)Expectations
E)The price of a complement good

Question 24

In the above figure,the shift in the demand curve from D to D₁ can be the result of

A)an increase in the price of a hamburger,a substitute for pizza.
B)an increase in the price of pizza.
C)a decrease in income if pizza is a normal good.
D)a change in quantity demanded.
E)an increase in the price of cola,a complement to pizza.

Question 25

Two brands of bottled water,Natural Water and Mountain Water,are close substitutes.If the price of Mountain Water decreases,the fall in price

A)shifts the demand curve for Natural Water rightward.
B)shifts the demand curve for Natural Water leftward.
C)increases the demand for Mountain Water.
D)increases the price of Natural Water.
E)More information is needed to determine if the demand curve for Natural Water shifts rightward or leftward.

Question 26

Pizza is a normal good.In the above figure,the shift in the demand curve from D to D₂ can be the result of

A)an increase in the cost of producing pizza.
B)a decrease in the price of cola,a complement to pizza.
C)a decrease in income.
D)a study that shows that pizza is a very healthy food.
E)an increase in the price of hamburgers,a substitute for pizza.

Question 27

In the above figure,the movement from point a to point b reflects

A)an increase in the price of the tomato sauce used to produce pizza.
B)an increase in the demand for pizza.
C)a decrease in the number of firms producing pizza.
D)an increase in the number of people who eat pizza.
E)a decrease in the price of pizza.

Question 28

Consumers regard Dell computers and Apple computers as substitutes.If the price of a Dell computer decreases,the

A)demand for Apple computers decreases.
B)supply of Dell computers increases.
C)demand for Dell computers decreases.
D)demand for Dell computers increases.
E)demand for Apple computers increases.

Question 29

Car insurance and cars are complements.If the price of car insurance increases,the

A)More information is needed to determine if the demand for cars increases or decreases.
B)demand for cars decreases.
C)quantity of cars demanded increases.
D)quantity of cars demanded decreases.
E)demand for cars increases.

Question 30

Which of the following increases the demand for a good?

A)A fall in the price of a substitute
B)An increase in income,assuming the good is an inferior good
C)The expectation that future income will be higher
D)A decrease in the number of buyers
E)A rise in the price of a complement

Question 31

If income increases and the demand for bus rides decreases,then

A)consumers are behaving irrationally.
B)bus rides are an inferior good.
C)bus rides must be a complement good with some other good.
D)bus rides are a normal good.
E)bus rides are a substitute good.

Question 32

In a recession,consumers have less income to spend.As a result,if dining out is a normal good,then which of the following would happen to the demand curve for dining out?

A)The effect on the demand curve is unknown.
B)The demand curve would not shift,but the price of dining out would fall.
C)The demand curve would shift leftward.
D)The demand curve would not shift,but the price of dining out would rise.
E)The demand curve would shift rightward.

Question 33

Scooters are a normal good and buyers' incomes decrease.Which of the figures above best illustrates how this change affects the demand curve for scooters?

A)Figure A
B)Figure B
C)Figure C
D)Figure D
E)None of the above answers is correct because the decrease in income will affect the supply curve not the demand curve.

Question 34

If the demand for digital cameras increases when consumers' incomes rise,then digital cameras are

A)a substitute for camcorders.
B)an inferior good.
C)a normal good.
D)made using advanced technology.
E)a complement to camcorders.

Question 35

A reduction in the cost of cable TV subscriptions will ________ the ________ for televisions.

A)increase;demand
B)increase;supply
C)decrease;demand
D)decrease;supply
E)None of the above is correct.

Question 36

Over the next few years more and more people prefer to ride on scooters.Which of the figures above best illustrates how this change affects the demand curve for scooters?

A)Figure A
B)Figure B
C)Figure C
D)Figure D
E)None of the above answers is correct because the change in tastes will affect the supply curve not the demand curve.

Question 37

Scooters and bicycles are substitutes.Suppose that the price of a bicycle falls.Which of the figures above best illustrates how this fall in price affects the demand curve for scooters?

A)Figure A
B)Figure B
C)Figure C
D)Figure D
E)None of the above answers is correct because the change in the price of a bicycle will affect the supply curve not the demand curve.

Question 38

In the above figure,the shift in the demand curve from D to D₂ can be the result of

A)a change in quantity demanded.
B)an increase in the price of a hamburger,a substitute for pizza.
C)an increase in the price of cola,a complement to pizza.
D)a decrease in the supply of pizza that raises the price of pizza.
E)an increase in income if pizza is a normal good.

Question 39

A huge 50 per cent off sale on golf clubs is advertised for next week.What happens this week in the market for golf clubs?

A)The supply of golf clubs decreases.
B)The supply of golf clubs increases.
C)The demand for and the supply of golf clubs decreases.
D)The demand for golf clubs increases.
E)The demand for golf clubs decreases.

Question 40

Lesley buys 6 cappuccinos per week when her income is $900 per week and buys 8 cappuccinos per week when her income is $1100 per week.For Lesley,cappuccinos are a(n)________ good.

A)substitute
B)inferior
C)normal
D)essential
E)luxury

Question 41

If the number of companies producing memory chips increases,then the

A)supply of memory chips increases.
B)supply of memory chips does not change.
C)supply of memory chips decreases.
D)demand for memory chips increases.
E)quantity of memory chips supplied increases.

Question 42

In the above figure,the shift in the demand curve from D to D₁ can be the result of

A)an increase in the price of cola,a complement to pizza.
B)an increase in the number of teenagers,all of whom demand more pizza than other age groups.
C)a decrease in income if pizza is a normal good.
D)new technology that increases the profit from producing pizza.
E)a decrease in the price of a hamburger,a substitute for pizza.

Question 43

The graph sbove illustrates the demand for peanuts.Peanuts are a normal good because the

A)demand for peanuts increases when the price of one of its substitutes rises.
B)peanuts have both substitutes and complements.
C)demand curve for peanuts slopes downward.
D)demand for peanuts increases when income increases.
E)demand curve shows that if the price of peanuts rises,there is a movement along the demand curve to a lower quantity demanded.

Question 44

A decrease in the price of a complement in production leads to

A)no change in the supply of the good in question.
B)an increase in the supply of the good in question and a decrease in the quantity supplied of the good in question.
C)a decrease in the quantity supplied of the good in question.
D)an increase in the supply of the good in question.
E)a decrease in the supply of the good in question.

Question 45

It is expected that the price of a tonne of wheat will increase in one month.This belief will result in

A)a decrease in the future supply of wheat.
B)an increase in the current supply of wheat.
C)an increase in the current quantity supplied of wheat.
D)a decrease in the current supply of wheat.
E)no change in the current or future supply of wheat.

Question 46

Which of the following increases the quantity supplied of compact discs but does NOT increase the supply of compact discs?

A)An increase in the price of the resources used to produce compact discs
B)A decrease in the price of a compact disc
C)An increase in the price of a compact disc
D)New technology that lowers the cost of producing compact discs
E)A decrease in the number of suppliers of compact discs

Question 47

In the above figure,________ will shift the demand curve from D to D₁.

A)a fall in the cost of producing pizza
B)a scientific article published that demonstrates eating pizza is good for one's health
C)an increase in income if pizza is an inferior good
D)buyers' expectations that pizza will be less expensive next week
E)a decrease in the price of a hamburger,a substitute for pizza

Question 48

The supply schedule

A)shows one quantity at one price.
B)is a curve showing the relationship between the amount the sellers are willing and able to sell and the price of that good when all relevant factors change.
C)is the schedule that suppliers have to keep or else they will be late.
D)shows the relationship between the quantity supplied and the price of a good when all other influences on selling plans change.
E)shows the relationship between the quantity supplied and the price of a good when all other influences on selling plans remain the same.

Question 49

Researchers have found a hybrid of corn that is cheaper to grow.This technological breakthrough

A)increases the demand for corn.
B)increases the supply of corn.
C)decreases the supply of corn.
D)Both answers A and C are correct.
E)Both answers A and B are correct.

Question 50

Milk can be used to produce cheese or butter.If the price of a kilogram of butter rises,what happens to the supply of cheese?

A)The supply of cheese could increase,decrease or stay the same depending on what happens to the supply of butter.
B)The supply of cheese stays the same and there is a decrease in the quantity supplied of cheese.
C)The supply of cheese increases.
D)The supply of cheese stays the same and there is no change in the quantity supplied of cheese.
E)The supply of cheese decreases.

Question 51

Which of the following does NOT increase the supply of personal computers,that is,does NOT shift the supply curve of personal computers?

A)A rise in the price of a personal computer
B)A fall in the cost of the components used to assemble personal computers
C)A change in the expected future price of a personal computer
D)An advance in the technology used to produce personal computers
E)An increase in the number of firms producing personal computers

Question 52

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

A)if the price of a good increases,firms buy less of it.
B)if the price of a good increases,the quantity supplied increases.
C)as people's income increases,the supply of goods increases.
D)demand increases when supply increases.
E)if the price of a good increases,the supply increases.

Question 53

The table above gives the demand schedule for lattes at the Bottomless Cup.If the price of a latte is $3,then the quantity of lattes demanded is ________ an hour.

A)90
B)230
C)80
D)60
E)30

Question 54

The quantity supplied of a good or service is the

A)list of all quantities at different prices,as illustrated by a demand schedule and a demand curve.
B)quantity produced at many prices.
C)list of all quantities at different prices,as illustrated by a supply schedule and a supply curve.
D)quantity produced at one price.
E)one quantity produced at a variety of prices.

Question 55

The impact of an increase in the price of a particular good is illustrated as a

A)rightward shift in its demand curve and a movement upward and to the left along its demand curve.
B)leftward shift in its demand curve.
C)movement upward and to the left along its demand curve.
D)rightward shift in its demand curve.
E)movement downward and to the right along its demand curve.

Question 56

If the Health Services Union successfully negotiates a wage increase for its members,how does the wage increase affect the supply of health services?

A)The quantity supplied increases.
B)The supply decreases.
C)The supply increases.
D)The quantity supplied decreases.
E)Both answers B and D are correct.

Question 57

The number of buyers of sport utility vehicles,SUVs,decreases sharply.So the

A)demand curve for SUVs shifts rightward.
B)demand curve for SUVs does not shift,nor is there a movement along the demand curve.
C)supply curve for SUVs shifts rightward.
D)demand curve for SUVs does not shift,but there is a movement downward along it.
E)demand curve for SUVs shifts leftward.

Question 58

The law of supply reflects the fact that

A)people buy more of a good when its price falls.
B)the demand curve is downward sloping.
C)suppliers have an incentive to use their resources in the way that brings the biggest return.
D)businesses can sell more goods at lower prices.
E)higher prices are more attractive to consumers because they signal a higher quality product.

Question 59

Mulch is shredded wood and is a by-product in the production of timber.Because these two goods are produced together,they are

A)normal goods in production.
B)complements in production.
C)not related.
D)inputs into the same production process.
E)substitutes in production.

Question 60

Which of the following results in a movement upward along the supply curve for movies in theatres?

A)A decrease in movie star salaries
B)An increase in the number of theatres
C)A decrease in the price of movie tickets
D)A decrease in the price of downloaded movies
E)An increase in the price of movie tickets

Question 61

Which of the following shifts the supply curve of popcorn leftward?

A)A decrease in the cost of producing popcorn.
B)A decrease in the price of popcorn.
C)An increase in the price of popcorn.
D)A decrease in the number of popcorn suppliers.
E)A technological development in the production of popcorn.

Question 62

The above figure shows the market for laptops.Which of the following causes a movement from B to A?

A)An increase in the price of laptops.
B)An increase in the cost of hard drives.
C)An increase in the number of laptop manufactures and sellers.
D)A decrease in the price of laptops.
E)An increase in the productivity of the workers manufacturing laptops.

Question 63

One reason supply curves have an upward slope is because

A)increased supply will require increased technology.
B)a higher price brings a greater profit,so firms want to sell more of that good.
C)to have more of the good supplied requires more firms to open.
D)people will pay a higher price when less is supplied.
E)None of the above answers is correct because supply curves have a downward slope.

Question 64

Market equilibrium occurs when

A)all markets become equal.
B)the quantity demanded equals the quantity supplied.
C)demand and supply move in opposite direction.
D)demand and supply change so that they are equal at all possible prices.
E)opposing forces pull demand and supply apart.

Question 65

Suppose the price of leather used to produce shoes increases.The higher price of leather ________ the supply of shoes,and the supply curve of shoes ________.

A)does not change;does not shift
B)decreases;shifts rightward
C)decreases;shifts leftward
D)increases;shifts rightward
E)increases;shifts leftward

Question 66

Autoworkers negotiate a wage increase.How does this change affect the supply curve of cars?

A)It shifts the supply curve leftward.
B)The supply curve will shift but there is not enough information to tell if the change shifts the supply curve rightward,leftward or not at all.
C)It shifts the supply curve rightward.
D)It creates a movement downward along the supply curve.
E)It does not shift the supply curve or create a movement along it.

Question 67

A change in the price of a good ________ its supply curve and ________ a movement along its supply curve.

A)does not shift;does not cause
B)does not shift;causes
C)shifts;does not cause
D)shifts;causes
E)None of the above because the change in the price might cause either a shift in the supply curve or a movement along the supply curve depending on the size of the change.

Question 68

In the above figure,the shift in the supply curve from S to S₂ reflects

A)a decrease in the quantity of pizza supplied.
B)a decrease in the supply of pizza.
C)an increase in the quantity of pizza supplied.
D)an increase in the supply of pizza.
E)a decrease in the supply of pizza and a simultaneous decrease in the quantity of pizza supplied.

Question 69

Which of the following shifts the supply curve for oranges?

A)Disastrous weather that destroys about half of this year's orange crop.
B)An increase in income for all orange consumers if oranges are a normal good.
C)An increase in the number of orange consumers.
D)A newly discovered increase in the nutritional value of oranges.
E)An increase in the price of bananas,a substitute in consumption for oranges.

Question 70

In the above figure,an increase in the cost of the cheese used to produce pizza

A)shifts the supply curve from S to S₁.
B)shifts the supply curve from S to S₂.
C)results in a movement from point b to point a.
D)results in a movement from point a to point b.
E)has no effect.

Question 71

Advances in productivity increase supply because they might

A)increase the price expected in the future.
B)raise the prices of resources used to produce the good.
C)increase the number of firms producing the good.
D)decrease the cost of production.
E)decrease the number of goods available.

Question 72

If a higher price for wheat decreases the quantity of corn being produced,which of the following describes what has occurred?

A)The supply of wheat decreased,and the supply of corn decreased.
B)The supply of wheat increased,and the quantity of corn supplied decreased
C)The supply of wheat increased,and the supply of corn decreased.
D)The quantity of wheat supplied increased,and the supply of corn decreased.
E)The quantity of wheat supplied increased,and quantity of corn supplied decreased.

Question 73

The quantity supplied of a good,service or resource is ________ during a specified period and at a specified price.

A)the amount that people are willing to sell
B)the amount that people are willing and able to buy
C)the amount sold
D)the amount that people are able to sell
E)the amount that people are able and willing to sell

Question 74

The above figure shows the market for laptops.Which of the following shifts the supply curve from S₀to S₂?

A)An increase in the productivity of the workers manufacturing laptops.
B)A decrease in the price of laptops.
C)A decrease in the number of laptop manufactures and sellers.
D)An increase in the cost of hard drives.
E)An increase in the price of laptops.

Question 75

The graph above illustrates the supply of cola.If the price of cola rises from $0.50 a can to $1.50 a can,the quantity of cola supplied

A)increases from 0 to 6,000 cans a day.
B)decreases from 4,000 cans to 0 cans a day.
C)increases from 0 cans to 4,000 cans a day.
D)remains unchanged because the supply increases not the quantity supplied.
E)remains unchanged because the supply decreases not the quantity supplied.

Question 76

In the above figure,the shift in the supply curve from S to S₁ reflects

A)a decrease in the quantity of pizza supplied.
B)a decrease in the supply of pizza.
C)an increase in the supply of pizza.
D)an increase in the quantity of pizza supplied.
E)None of the above answers is correct.

Question 77

Which of the following increases the supply of a good?

A)Producers expect higher prices for the good in the future.
B)The number of producers decreases.
C)Prices of inputs used to produce the good rise.
D)Productivity improves.
E)There is a decrease in the price of a complement in production.

Question 78

An increase in the productivity of producing jeans results in

A)buyers demanding more jeans because they are now more efficiently produced.
B)the supply of jeans increasing.
C)buyers demanding fewer jeans because their price will fall,which signals lower quality.
D)the quantity of jeans supplied increasing.
E)some change,but the impact on the supply of jeans is impossible to predict.

Question 79

In the above figure,the shift in the supply curve from S to S₂ might reflect

A)an increase in the price of a pizza.
B)an increase in income if pizza is a normal good.
C)a decrease in the cost of the tomato sauce used to produce pizza.
D)an increase in the price of a good that is a substitute for consumers.
E)a decrease in the number of pizza producers.

Question 80

In the above figure,the movement from point a to point b reflects

A)an increase in the price of pizza.
B)a decrease in the cost of the tomato sauce used to produce pizza.
C)an increase in the supply of pizza.
D)a decrease in income if pizza is a normal good.
E)an increase in the number of producers of pizza.