Deck 3: Part 1: Market Demand and Supply

Question 1

The "ceteris paribus" clause in the law of demand does not allow which of the following factors to change?

A) Consumer tastes and preferences.
B) The prices of other goods.
C) Expectations.
D) All of the above.

Answer 1

D

Question 2

Which of the following is true for the law of demand?

A) Sellers increase the quantity of a good available as the price of the good increases.
B) An increase in price results from false needs.
C) There is an inverse relationship between the price of a good and the quantity of the good demanded.
D) Prices increase as more units of a product are demanded.

Answer 2

C

Question 3

Which of the following is closest to the definition of demand?

A) People's willingness to supply goods at specific prices.
B) People's willingness to buy goods and services at given prices.
C) People's expectations of lower prices of goods and services.
D) Producer's expectations of selling more goods.
E) The interaction of people's willingness to buy and sell goods.

Answer 3

B

Question 4

The law of demand is illustrated by a demand curve that is:

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

Question 5

The law of demand states that,ceteris paribus,price and quantity demanded are:

A) directly related.
B) inversely related.
C) uniformly related.
D) horizontally related.

Question 6

The law of demand indicates that:

A) every physical good has a use.
B) when people want a good badly enough, they will find a way to pay for it.
C) the desire for a good is unrelated to its price.
D) the quantity of a good that people will buy is inversely related to the price of the good.

Question 7

In economics,the demand for a good refers to the amount of the good people:

A) would like to have if the good were free.
B) are willing to buy at various prices.
C) need to achieve a minimum standard of living.
D) will buy at alternative income levels.

Question 8

The law of demand indicates that as the price of a good increases:

A) suppliers sell less of it.
B) suppliers sell more of it.
C) buyers buy less of it.
D) buyers buy more of it.

Question 9

The "other things being equal" clause in the law of demand does not allow which of the following factors to change?

A) Consumer income.
B) The prices of other goods.
C) Consumer tastes and preferences.
D) All of the above.

Question 10

The law of demand states that:

A) as the price of a good increases, more units are demanded.
B) there is a direct relationship between the price of a good and the quantity of the good produced.
C) there is a negative relationship between the price of a good and the quantity of the good demanded.
D) there is an increase in the need for a good as the price of the good increases.

Question 11

The law of demand says that the lower the price charged for a good,ceteris paribus,the:

A) greater the quantity demanded per period of time.
B) greater the demand for the good per period of time.
C) smaller the demand for the good per period of time.
D) smaller the quantity demanded per period of time.
E) larger the supply of the good per period of time.

Question 12

According to the law of demand,if:

A) product price increases, quantity demanded will decrease.
B) consumer income increases, quantity demanded will increase.
C) product price increases, quantity demanded will increase.
D) consumer income increases, quantity demanded will decrease.
E) supply increases, demand will increase.

Question 13

According to the law of demand,when will higher corn prices reduce the quantity demanded of corn?

A) Always.
B) When the supply of corn is fixed.
C) When nonprice determinants, like income and the number of buyers, are unchanged.
D) When there are no shortages or surpluses of corn.

Question 14

The law of demand is the principle that there is ____ relationship between the price of a good and the quantity buyers are willing to purchase in a defined time period,ceteris paribus.

A) a direct
B) no
C) an inverse
D) independent

Question 15

The law of demand refers to the:

A) inverse relationship between the price of a good and the willingness of consumers to buy it.
B) price increase that results from an increase in demand for a good of limited supply.
C) inverse relationship between the price of a good and the quantity offered for sale.
D) increase in the quantity of a good available when its price increases.

Question 16

Consumers buy less of a good as its price increases because:

A) production costs have risen.
B) substitute goods are now relatively cheaper.
C) the income of consumers has effectively risen.
D) the higher price will make the good more valuable to each consumer.

Question 17

The fact that price and quantity demanded are related negatively illustrates the:

A) law of supply.
B) law of quantity supply.
C) law of demand.
D) law of quantity demanded.
E) point that some facts are unobservable.

Question 18

The law of demand is graphically demonstrated by a(n):

A) perfectly vertical demand curve.
B) perfectly horizontal demand curve.
C) downward-sloping demand curve.
D) upward-sloping demand curve.
E) curved demand line.

Question 19

The law of demand shows that:

A) there is an inverse relationship between price and quantity demanded.
B) the demand curve is positively sloped.
C) when the price of a good increases, the quantity demanded increases.
D) the supply curve is vertical.
E) individual demand is the same as market demand.

Question 20

A curve that is derived by summing horizontally individual demand curves is called:

A) aggregate supply.
B) market supply.
C) aggregate demand.
D) market demand.

Question 21

We can find the market demand for pears by:

A) adding up all the prices people are willing to pay for pears.
B) multiplying the number of people times the price of pears.
C) adding up the number of pears that producers are willing to sell.
D) multiplying the number of pears by the price of pears.
E) adding up all the individual demand curves for pears.

Question 22

A market demand curve:

A) is the sum of the demand curves of all the individuals in a particular market.
B) is determined by the demand of those who purchase in quantity.
C) is always horizontal.
D) cannot be estimated.
E) never includes demand by the government.

Question 23

A demand curve shows the relationship between:

A) price and quantity demanded.
B) the demand and supply schedules.
C) demand and supply equilibrium.
D) leakages and injections.
E) price and technology.

Question 24

Which of the following can bring about a change in the quantity demanded?

A) Change in supply.
B) Change in quality.
C) Change in income.
D) Change in product price.
E) Change in taste.

Question 25

Exhibit 3-1 Market demand

Suppose there are only three people in the economy: Jane,Harry,and Bob.The individual demand for corn for each of these consumers is given in Exhibit 3-1.The total quantity demanded of corn if the market price is $5 is ____.

A) 3
B) 25
C) 17
D) 8
E) 26

Question 26

Suppose there are 100 consumers with identical individual demand curves.When the price of a movie ticket is $8,the quantity demanded for each person is 5.When the price is $4,the quantity demanded for each person is 9.Assuming the law of demand holds,which of the following choices is the most likely quantity demanded in the market when the price is $6?

A) 700
B) 1,200
C) 400
D) 1,000
E) 100

Question 27

At a price of $5,Sam buys 10 units of a product; when the price increases to $6,Sam buys 8 units.Martha says Sam's demand has decreased.Is Martha correct?

A) Yes, Martha is correct. Sam's demand has decreased.
B) No, Martha is incorrect. Sam's demand has increased.
C) No, Martha is incorrect. Sam's quantity demanded has decreased, and his demand has not changed.
D) No, Martha is incorrect. Sam's quantity demanded has increased, and his demand has increased.
E) No, Martha is incorrect. Sam's demand has increased, and his quantity demanded has decreased.

Question 28

An increase in the quantity demanded of a good is most often due to:

A) current prices.
B) higher prices.
C) higher income.
D) lower prices.
E) technological change.

Question 29

A decrease in quantity demanded is given by a(n):

A) downward shift of the demand curve.
B) upward shift of the demand curve.
C) downward movement to the right along the demand curve.
D) upward movement to the left along the demand curve.
E) downward shift of both demand and supply curves.

Question 30

A curve that depicts the relationship between price and quantity demanded is the:

A) supply curve.
B) supply schedule.
C) demand curve.
D) equilibrium price.

Question 31

The demand schedule for a good shows:

A) the specific quantity of the good that people are willing and able to sell at different prices.
B) the positive relationship between the price and the quantity of the good.
C) no relationship between the price and the quantity of the good.
D) the specific quantity of the good that people are willing and able to buy at different prices.
E) the quantity of the good that is sold in the market.

Question 32

The negative slope of the demand curve reflects the:

A) positive relationship between price and quantity.
B) proportional relationship between price and quantity.
C) inverse relationship between price and quantity.
D) positive relationship between income and quantity.
E) inverse relationship between income and price.

Question 33

Demand curves are negatively sloped when people buy:

A) less as the price decreases.
B) more as the price increases.
C) the same amount as the price changes.
D) more as the price decreases.
E) less as incomes decrease.

Question 34

Exhibit 3-1 Market demand

Suppose there are only three people in the economy: Jane,Harry,and Bob.The individual demand for corn for each of these consumers is given in Exhibit 3-1.The total quantity demanded of corn if the market price is $4 is ____.

A) 3
B) 25
C) 17
D) 8
E) 36

Question 35

A demand curve for The Steel Porcupines' concert tickets would show the:

A) number of tickets the box office is willing to sell at various prices.
B) number of people who need tickets.
C) quality of people who want to buy these concert tickets.
D) number of tickets that will be purchased at various prices.

Question 36

A demand curve:

A) has a positive slope.
B) illustrates the negative relationship between price and quantity demanded.
C) illustrates the positive relationship between price and quantity demanded.
D) is based on the assumption of a stable supply curve.
E) shifts about in a random fashion.

Question 37

A demand curve for The Steel Porcupines' concert tickets would show the:

A) quality of service that customers demand when they buy a ticket.
B) number of people who like to attend the concert.
C) number of tickets the promoters are willing to sell at each price.
D) number of concert tickets that will be purchased at each price.

Question 38

The curve that shows the relationship between the price of a good and the quantity that consumers are willing to purchase at each price is the

A) supply curve.
B) demand curve.
C) production possibilities curve.
D) consumption curve.

Question 39

The law of demand refers to the:

A) tendency of prices to increase as more units of a product are demanded.
B) increase in price that results from an increase in demand for a good with a limited supply.
C) inverse relationship between the price of a good and the quantity of the good demanded.
D) increase in the quantity of a good available as the price of the good increases.

Question 40

The horizontal summation of individual demand curves gives:

A) a supply curve.
B) a Phillips curve.
C) a market demand curve.
D) the quantity supplied.
E) a production function.

Question 41

Which of the following best represents the effects of a decrease in the price of coffee,other things being equal?

A) A leftward shift in the demand curve for coffee.
B) A downward movement along the demand curve for coffee.
C) A rightward shift in the demand curve for coffee.
D) An upward movement along the demand curve for coffee.

Question 42

Ceteris paribus,a change in the price of a good always results in a change in:

A) income.
B) tastes.
C) quantity demanded.
D) both income and tastes.
E) the price of other goods.

Question 43

Under the law of demand,any increase in price will cause ____ in quantity demanded.

A) a decrease
B) an increase
C) no change
D) constant change

Question 44

A decrease in the price of coffee,other things being equal,causes a(n):

A) leftward shift in the demand curve for coffee.
B) downward movement along the demand curve for coffee.
C) rightward shift in the demand curve for coffee.
D) upward movement along the demand curve for coffee.

Question 45

A rightward shift in the demand curve is called a(n):

A) decrease in output.
B) decrease in demand.
C) increase in demand.
D) increase in income.

Question 46

A movement along the demand curve for automobiles is caused by a change in:

A) the price of automobiles.
B) the price of gasoline.
C) the price of steel.
D) consumers' incomes.

Question 47

Which of the following best represents the effects of an increase in the price of coffee,other things being equal?

A) A leftward shift in the demand curve for coffee.
B) A downward movement along the demand curve for coffee.
C) A rightward shift in the demand curve for coffee.
D) An upward movement along the demand curve for coffee.

Question 48

Other things being equal,the effects of an increase in the price of orange juice would best be represented by a(n):

A) upward movement along the demand curve for orange juice.
B) leftward shift in the demand curve for orange juice.
C) downward movement along the demand curve for orange juice.
D) rightward shift in the demand curve for orange juice.

Question 49

A movement along a demand curve is called a change in:

A) income.
B) quantity demanded.
C) demand.
D) tastes.
E) population.

Question 50

Other things being equal,the effect of an increase in the price of Coca-Cola would cause a(n):

A) upward movement along the demand curve for Coca-Cola.
B) leftward shift in the demand curve for Coca-Cola.
C) downward movement along the demand curve for Coca-Cola.
D) rightward shift in the demand curve for Coca-Cola.

Question 51

The market demand is the:

A) sum of all individual demand curves in a market.
B) sum of all individual prices in a market.
C) sum of all individual demand curves and supplies in a market.
D) vertical sum of all individual demand curves.

Question 52

Which of the following would not cause market demand for a normal good to decline?

A) An increase in the price of a substitute.
B) An increase in the price of a complement.
C) A decline in consumer income.
D) Consumer expectations that the good will go on sale in the near future.
E) An announcement by the Surgeon General that the product contributes to premature death.

Question 53

A fall in the price of a good causes an increase in its:

A) quantity demanded.
B) demand.
C) quantity supplied.
D) supply.

Question 54

The horizontal summation of all individual demands at different given prices results in the:

A) market supply curve.
B) individual supply curve.
C) individual demand curve.
D) equilibrium demand and supply curves.
E) market demand curve.

Question 55

Which of the following is least likely to increase the demand for new tires?

A) a decrease in the price of tires
B) a decrease in the price of cars
C) an increase in consumer income
D) an increase in the number of miles people drive per year

Question 56

Which of the following best represents the effects of a decrease in the price of tomato juice,other things being equal?

A) An upward movement along the demand curve for tomato juice.
B) A downward movement along the demand curve for tomato juice.
C) A rightward shift in the demand curve for tomato juice.
D) A leftward shift in the demand curve for tomato juice.

Question 57

Other things being equal,the effect of a decrease in the price of Coca-Cola would cause which of the following?

A) A rightward shift in the demand curve for Coca-Cola.
B) A downward movement along the demand curve for Coca-Cola.
C) A leftward shift in the demand curve for Coca-Cola.
D) An upward movement along the demand curve for Coca-Cola.

Question 58

When economists say the quantity demanded of a product has increased,they mean the:

A) demand curve has shifted to the left.
B) demand curve has shifted to the right.
C) price of the product has fallen, and consequently, consumers are buying more of it.
D) price of the product has risen, and consequently, consumers are buying less of it.

Question 59

Other things being equal,the effects of an increase in the price of computers would best be represented by which of the following?

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

Question 60

Other things being equal,the effects of a decrease in the price of orange juice,is represented by which of the following?

A) A rightward shift in the demand curve for orange juice.
B) An increase in the quantity demanded for orange juice.
C) A leftward shift in the demand curve for orange juice.
D) A decrease in the quantity demanded orange juice.

Question 61

Which of the following is most likely to shift the demand curve for electricity to the left?

A) consumers becoming more energy conscious.
B) an increase in income.
C) a decrease in the price of electricity.
D) an increase in the price of natural gas, a substitute source of energy.

Question 62

Which of the following would cause a shift in the demand curve for a good?

A) An increase in consumers' income.
B) A decrease in the number of consumers.
C) The expectation that the price of a good will increase in the future.
D) All of the above.

Question 63

An increase in the demand for a good means that:

A) the demand curve has shifted to the left.
B) the good's price has fallen and, as a result, consumers are buying more of the good.
C) the good has become scarce.
D) consumers are willing to purchase more of the good at each possible price.

Question 64

Suppose all of the major computer manufacturers announced that beginning next month there would be major price reductions on their computers.This would cause the current demand for computers to:

A) increase.
B) decrease.
C) remain unchanged.
D) increase and then decrease.

Question 65

Which of the following will not shift the demand curve for televisions?

A) An increase in the price of televisions.
B) An increase in consumer income.
C) An increase in the price of radios (a substitute).
D) An increase in the price of cable service (a complement).

Question 66

When economists say the demand for a product has increased,they mean the:

A) demand curve has shifted to the right.
B) price of the product has fallen, and consequently, consumers are buying more of it.
C) cost of producing the product has risen.
D) amount of the product that consumers are willing to purchase at various prices has decreased.

Question 67

Which of the following will increase the demand for motorcycles?

A) A fall in the price of motorcycles.
B) A fall in insurance rates for motorcycles.
C) A fall in the price of automobiles.
D) A fall in buyers' incomes (assuming motorcycles are a normal good).
E) A fall in consumer preference for motorcycles.

Question 68

An increase in the expected future price of a good will cause the current demand for the good to:

A) decrease, which is a shift to the left of the demand curve.
B) decrease, which is a shift to the right of the demand curve.
C) increase, which is a shift to the left of the demand curve.
D) increase, which is a shift to the right of the demand curve.

Question 69

Three of the four events described below might reasonably be expected to shift the demand curve for beef to a new position.One would not shift that demand curve.The single exception is a(n):

A) change in people's tastes for beef.
B) increase in the money incomes of beef consumers.
C) fall in the price of beef.
D) change in the price of a product competitive with beef (e.g. pork).

Question 70

If consumer tastes are changing more in favor of the consumption of a particular good the:

A) market demand curve will shift to the left.
B) consumer will move up a given demand curve, decreasing the quantity demanded.
C) consumer would move down a given demand curve, decreasing the quantity demanded.
D) consumer would move down a given demand curve, increasing the quantity demanded.
E) market demand curve would shift to the right.

Question 71

Which of the following would shift the demand curve for autos to the right?

A) A fall in the price of autos.
B) A fall in the price of auto insurance.
C) A fall in consumers' incomes.
D) A fall in the price of steel.

Question 72

If people expect the price of packaged coffee to rise next week,coffee demand will:

A) decrease now.
B) increase now.
C) stay the same now and increase next week.
D) stay the same now and decrease next week.
E) stay the same now and next week.

Question 73

Which of the following would most likely cause the demand for veggie burgers to increase?

A) A decline in the price of veggie burger.
B) An increase in the price of tofu burgers, perceived as a substitute by veggie burger consumers.
C) An increase in the price of burger buns.
D) A technological innovation that lowers the cost of producing veggie burgers.

Question 74

Which of the following will not cause a change in demand for crackers?

A) A change in consumers' income.
B) A change in the price of crackers.
C) A change in the price of cheese.
D) A change in the number of cracker-eaters.
E) A change in consumers' tastes for crackers.

Question 75

Suppose the prices of petroleum products,including gasoline and fuel oil,fell sharply.Which of the following would most likely occur as the result of the lower prices of petroleum products?

A) A reduction in the consumption of gasoline.
B) An increase in demand for solar heating systems.
C) An increase in demand for smaller, more efficient automobiles.
D) A reduction in the demand for home insulation products.

Question 76

In economic terms,to say that there has been an increase in demand for a product means that:

A) the demand curve has shifted to the left.
B) the product's price has fallen and as a result consumers are buying a larger quantity of the product.
C) the product has become scarce for some reason.
D) consumers are now willing to purchase more of the product at each possible price.

Question 77

When firms advertise their products,they are attempting to:

A) shift the supply curve of the product to the right.
B) shift the supply curve of the product to the left.
C) shift the demand for the product to the right.
D) shift the demand for the product to the left.
E) create a surplus of the product.

Question 78

Which of the following will not cause a shift in the demand curve for good X?

A) A change in the price of a complementary good.
B) A change in the price of good X.
C) A change in consumer tastes and preferences for good X.
D) An increase in consumer income.

Question 79

An increase in demand:

A) results in a leftward shift of the demand curve.
B) could be caused by a decrease in the price of the good.
C) could be caused by an increase in the price of a substitute good.
D) is shown as movement down along a demand curve.

Question 80

A baby boom will have what immediate effect on the disposable diaper market?

A) Supply decreases.
B) Supply increases.
C) Demand decreases.
D) Demand increases.
E) Supply and demand remains the same.