Deck 3: Supply and Demand

Question 1

Which of the following is a goal of businesses?

A) To maximize happiness.
B) To maximize profits given resource constraints.
C) To produce the greatest quantity of goods.
D) To maximize general welfare.

Answer 1

B

Question 2

A market exists for the sale and purchase of:

A) Computer services but not nuclear warheads.
B) Nuclear warheads but not illegal drugs.
C) Illegal drugs but not medical services.
D) Illegal drugs,computer services,and nuclear warheads.

Answer 2

D

Question 3

Which of the following is a constraint that motivates economic interactions?

A) The outsourcing of jobs.
B) The limited resources that individuals have.
C) The limited profit margin for individuals.
D) The inability of individuals to take on risk.

Answer 3

B

Question 4

The goals of the principal participants in the economy are to maximize:

A) Income for consumers,profits for business,and taxes for government.
B) Goods and services for consumers,scarce resources for businesses,and money for government.
C) Happiness for consumers,profits for businesses,and general welfare for government.
D) Goods and services for consumers,scarce resources for businesses,and general welfare for government.

Question 5

For government,most market activity can be explained by the goal of:

A) Welfare maximization.
B) Social responsibility.
C) Utility maximization.
D) Charitable responsibility.

Question 6

In the U.S.economy,foreigners participate in:

A) The factor market only.
B) The product market only.
C) Both the product and factor markets.
D) Foreigners do not participate in the U.

Question 7

A market:

A) Is any place where goods are bought and sold.
B) Must have a physical location so buyers and sellers can meet.
C) Does not exist for the exchange of illegal goods and services.
D) Must be approved by the government before it can exist.

Question 8

Economic interactions with others are necessary because:

A) Resources are limited.
B) People are lazy.
C) Advertising makes us want additional goods and services.
D) Some people are rich and others are poor.

Question 9

Producers:

A) Provide dollars to the product market.
B) Purchase factors of production from the factor market.
C) Do not participate in the factor market.
D) Provide factors of production to the product market.

Question 10

Any place where factors of production are bought and sold is a:

A) Private-goods market.
B) Stock market.
C) Product market.
D) Factor market.

Question 11

Consumers _______ factors of production in the _______ market.

A) Sell;product
B) Sell;factor
C) Buy;product
D) Buy;factor

Question 12

Consumers:

A) Provide dollars to the product market.
B) Receive dollars from the product market.
C) Provide dollars to the factor market.
D) Receive goods and services from the factor market.

Question 13

Which of the following is not a factor of production?

A) Land.
B) Wages.
C) Labor.
D) Capital.

Question 14

Market participants include:

A) Business firms and consumers but not foreigners.
B) Consumers only.
C) Consumers,business firms,governments and foreigners.
D) Foreigners but not business firms.

Question 15

Which of the following participates in the product market?

A) Consumers only.
B) Consumers,governments and foreigners.
C) Governments and consumers only.
D) Foreigners only.

Question 16

A market in which finished goods and services are exchanged is a:

A) Financial market.
B) Intermediate-goods market.
C) Factor market.
D) Product market.

Question 17

Producers _______ factors of production in the _______ market.

A) Buy;factor
B) Sell;stock
C) Buy;stock
D) Sell;product

Question 18

The direct exchange of one good for another is known as:

A) Welfare.
B) Barter.
C) Imports.
D) DemanD.

Question 19

For consumers,most market activity can be explained by the goal of:

A) Charitable responsibility.
B) Maximizing income.
C) Profit maximization.
D) Maximizing happiness.

Question 20

People benefit by participating in the market because:

A) Resources are no longer limited.
B) It facilitates specialization and increased consumption.
C) Buyers and sellers have the same goals.
D) Participants in the market do not have to make choices.

Question 21

Ceteris paribus,the demand curve for a good will shift to the right in response to:

A) A decrease in income.
B) An increase in the costs of production.
C) An increase in tastes or preferences for the good.
D) A higher price for the gooD.

Question 22

Economists make a distinction between changes in quantity demanded and changes in demand:

A) Because the supply curve shifts whenever there is a change in demand.
B) Because the demand curve shifts whenever there is a change in quantity demanded.
C) To distinguish a movement along a demand curve from a shift of the demand curve.
D) To distinguish a surplus from a shortage.

Question 23

Which of the following is not a determinant of demand?

A) Income.
B) Available technology.
C) Price of other goods.
D) Expectations of income.

Question 24

Ceteris paribus,which of the following will cause the demand for peanut butter to decrease?

A) The factories that produce peanut butter close down for safety reasons.
B) The workers who pick peanuts,the main ingredient in peanut butter,demand a higher wage.
C) Many people learn that they are allergic to peanut butter.
D) It is reported that peanut butter prevents heart attacks.

Question 25

According to the law of demand:

A) Price and quantity demanded are inversely related.
B) Price is constant along a particular demand curve.
C) The demand curve will shift rightward as price increases.
D) Businesses will produce more as price increases.

Question 26

Ceteris paribus,according to the law of demand,if the price of a computer game increases from $25 to $30,the:

A) Quantity demanded will not be affected.
B) Demand curve for computer games will shift to the left.
C) Quantity demanded of computer games will increase.
D) Quantity demanded of computer games will decrease.

Question 27

According to the law of demand,a demand curve:

A) Is upward sloping.
B) Is downward sloping.
C) Is a horizontal,or flat,line.
D) Can slope either upward or downward based on consumer behavior.

Question 28

The quantity of a good demanded in a given time period increases as the price falls,which is known as:

A) Say's Law.
B) The law of ceteris paribus.
C) The law of demand.
D) The opportunity cost.

Question 29

Ceteris paribus,_______ can change without shifting the demand curve for jackets.

A) Income
B) Taste
C) The price of jackets
D) The price of sweaters

Question 30

A demand schedule refers to the combinations of price and quantity that represent the:

A) Concerns of regulators.
B) Preferences of businesses.
C) Desires of consumers.
D) Demands of producers.

Question 31

In order to demand a good,the buyer must:

A) Want the good very much.
B) Be both willing and able to pay for it.
C) Think that the good has significant utility.
D) Be aware of the opportunity costs.

Question 32

Which of the following will not shift the demand curve for natural gas?

A) A change in consumer income.
B) A change in consumer expectations.
C) A change in the weather and heating requirements.
D) A change in the technology used to produce natural gas.

Question 33

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

A) Income.
B) Taste.
C) The price of the good itself.
D) The prices of other related goods.

Question 34

Ceteris paribus,the quantity demanded of a good will decrease in response to:

A) Higher income.
B) A higher price for the good.
C) A rightward shift of the supply curve.
D) A lower price for the gooD.

Question 35

Ceteris paribus,which of the following will cause the demand curve for basketballs to shift to the left?

A) The cost of producing basketballs increases.
B) Consumer incomes increase.
C) Parents decide soccer is a better sport for their children than basketball.
D) People become more interested in basketball as more football players are arrested for drugs.

Question 36

Which of the following situations is sufficient to represent current demand for a car?

A) You have plenty of money to buy it,but you can't decide if you want a motorcycle or a car.
B) You have enough money to buy it,and you are willing to spend the money on the car.
C) You've decided you want a car,and you can possibly borrow the money from a bank.
D) You want to buy a motorcycle and a car,and you'll have enough money for both in two years.

Question 37

Ceteris paribus means:

A) Holding everything else constant.
B) Allowing the free market to decide,not government.
C) Changing prices to see how demand (or supply)shifts.
D) Allowing the government to decide,not the market.

Question 38

A change in demand means there has been a shift in the demand curve,and a change in the quantity demanded:

A) Corresponds to a movement along the demand curve.
B) Means a shortage or surplus will result from holding prices constant.
C) Results from a change in the price of other related goods.
D) Also means demand has shifteD.

Question 39

Ceteris paribus,which of the following will cause the demand for pizza to increase in a college town?

A) A new pizza restaurant opens near campus.
B) A decrease in the costs associated with pizza production.
C) A decrease in the price of tacos.
D) An increase in the number of students who eat pizza.

Question 40

According to the law of demand,a change in _______ causes a movement along the demand curve.

A) Buyers' expectations
B) The number of buyers
C) The price of the good
D) The price of other related goods

Question 41

Which of the following is a determinant of supply?

A) Consumer tastes or preferences.
B) Consumer income.
C) Prices of the factors of production.
D) Number of buyers.

Question 42

A market is said to be in equilibrium when:

A) Demand is fully satisfied at all alternative prices.
B) The buying intentions of all consumers are realized.
C) The supply intentions of all sellers are realized.
D) The quantity demanded equals the quantity supplieD.

Question 43

Ceteris paribus,which of the following will cause a rightward shift of the supply curve for plasma TVs?

A) An increase in the cost of materials associated with the production of plasma TVs.
B) A decrease in the quantity of labor available to produce plasma TVs.
C) A subsidy paid to the producers of plasma TVs.
D) A decrease in the price of plasma TVs.

Question 44

Ceteris paribus,according to the law of supply,if the price of lawn mowing decreases from $50 per lawn to $45 per lawn,then the:

A) Quantity supplied of lawn mowing will decrease.
B) Supply curve for lawn mowing will shift to the right.
C) Quantity supplied of lawn mowing will increase.
D) Quantity supplied of lawn mowing will stay the same.

Question 45

Which of the following would not cause the market supply of cell phones to change?

A) Telecommunications are deregulated,and anyone can produce and sell cell phones.
B) A cheaper technology for producing cell phones is developed.
C) A reduction in the demand for cell phones causes the price to fall.
D) Taxes levied on cell phone production are reduceD.

Question 46

The market supply of a particular good:

A) Is the sum of the quantities of the good that all producers are willing and able to sell.
B) Indicates that sellers will produce more of the good at lower prices,ceteris paribus.
C) Indicates that consumers will purchase more of the good at higher prices,ceteris paribus.
D) Measures the quantity of goods that producers actually sell.

Question 47

The equilibrium price and quantity are determined by the:

A) Market mechanism.
B) Magical hand.
C) Invisible mind.
D) Government.

Question 48

Which of the following provides the best example of the law of supply?

A) Falling labor costs cause an increase in supply.
B) Improved technology shifts the supply curve to the right.
C) Some producers leave the industry,and the supply curve shifts to the left.
D) An increase in price entices suppliers to produce more.

Question 49

A movement along the supply curve is the same as a:

A) Shift in the supply curve.
B) Change in the quantity supplied.
C) Change in supply.
D) Change in the number of producers.

Question 50

In a market,the equilibrium price is determined by:

A) Only what buyers are willing and able to purchase.
B) Only what sellers are willing and able to offer for sale.
C) The interaction of both demand and supply.
D) The government.

Question 51

An increase in the supply of frozen yogurt will take place when:

A) The price of frozen yogurt decreases.
B) The cost of producing frozen yogurt decreases.
C) The taxes on frozen yogurt increase.
D) Consumer incomes increase.

Question 52

Which of the following events would cause a rightward shift in the supply curve for automobiles?

A) An improvement in the technology used to produce automobiles.
B) An increase in the cost of labor for automobile producers.
C) An increase in taxes for automobile producers.
D) A decrease in the number of sellers.

Question 53

The quantity of a good that suppliers are willing and able to supply at a given price in a given time period depends on:

A) Income.
B) Consumers' expectation of future prices and costs.
C) The costs of producing the good.
D) The consumer demand for the gooD.

Question 54

Ceteris paribus,which of the following will cause the supply of milk shakes to increase?

A) Consumer incomes increase.
B) A new diet craze suggests that people can consume milk shakes and lose weight.
C) The cost of milk,a key ingredient,decreases.
D) The wages paid to those who work on dairy farms increases.

Question 55

Ceteris paribus,which of the following will cause the supply of paper to decrease?

A) The price of lumber,an ingredient in paper production,increases.
B) The federal government decides to subsidize the production of paper.
C) People rely more on electronic books and less on printed materials.
D) The technology used to produce paper improves.

Question 56

The market demand for a particular good indicates:

A) That consumers will purchase more of the good at higher prices,ceteris paribus.
B) That sellers will offer more of the good only at higher prices,ceteris paribus.
C) The total quantities buyers are willing and able to purchase at alternative prices,ceteris paribus.
D) How much of the good is actually purchased in a given period of time.

Question 57

Which of the following will cause a leftward shift of the supply curve for houses?

A) A decrease in consumer incomes.
B) An improvement in the technology used to build houses.
C) Consumer expectations that the price of houses will increase next year.
D) An increase in the cost of construction materials.

Question 58

A market shortage occurs when:

A) The quantity demanded is less than the quantity supplied at a given price.
B) The market price is below equilibrium.
C) Sellers produce a lot of the product and consumers like it a lot.
D) A new product is introduced at the equilibrium price.

Question 59

Ceteris paribus,according to the law of supply,if the price of product Z increases from $6 to $8,then the:

A) Quantity supplied will not be affected.
B) Supply curve for Z will shift to the left.
C) Quantity supplied of Z will increase.
D) Quantity supplied of Z will decrease.

Question 60

Which of the following will cause a leftward shift of the supply curve for electricity?

A) A decrease in the costs associated with the production of electricity.
B) A decrease in consumer incomes.
C) An increase in the taxes on electricity production.
D) An increase in the price of electricity.

Question 61

The price of chocolate candy bars rises.This could be due to:

A) A decrease in the wage rate paid to workers in the candy bar factories.
B) A decrease in the cost of chocolate,which is used to produce candy bars.
C) A subsidy by the federal government for the producers of chocolate candy bars.
D) A decrease in the number of chocolate candy bar producers.

Question 62

Which of the following would cause a decrease in the price of automobiles?

A) A technological advance in automobile manufacturing.
B) An increase in the wages paid to automobile assembly line workers.
C) A decrease in the cost of gasoline.
D) An increase in the number of buyers.

Question 63

If supply is unchanged,a decrease in the demand for soft drinks will cause equilibrium price to:

A) Rise and equilibrium quantity to fall.
B) Fall and equilibrium quantity to fall.
C) Fall and equilibrium quantity to rise.
D) Rise and equilibrium quantity to rise.

Question 64

If a state decides to reduce the cost of college tuition,by providing more Pell grants to students ceteris paribus,then the:

A) Quantity demanded of a college education in the state will decrease.
B) Demand for a college education in the state will decrease.
C) Quantity demanded of a college education in the state will increase.
D) Quantity supplied of a college education in the state will increase.

Question 65

If supply is unchanged,a decrease in the demand for tacos will cause the equilibrium price to:

A) Rise and equilibrium quantity to fall.
B) Rise and equilibrium quantity to rise.
C) Fall and equilibrium quantity to rise.
D) Fall and equilibrium quantity to fall.

Question 66

When there is a surplus in a market,prices are likely to fall because:

A) Buyers do not wish to buy as much as sellers want to sell.
B) Some buyers will offer to pay a higher price,initiating a move up the supply curve.
C) Sellers are likely to increase their production.
D) Buyers will wait for the government to establish a price floor.

Question 67

A price ceiling is:

A) A lower limit on the price of a good.
B) Above the equilibrium price.
C) An upper limit on the price of a good.
D) A limit on the price of goods sold abroaD.

Question 68

In the market for web design services,when more companies desire web pages,the equilibrium:

A) Price of web design services decreases.
B) Price of web design services remains unchanged.
C) Quantity of web design services increases.
D) Quantity of web design services decreases.

Question 69

In the market for web design services,if businesses expect consumers to make more on-line purchases,then the equilibrium:

A) Price of web design services will decrease.
B) Price of web design services will increase.
C) Quantity of web design services will remain unchanged.
D) Quantity of web design services will decrease.

Question 70

If a state adopts a free college tuition program,ceteris paribus,economists expect there to be a:

A) A surplus of college education opportunities in the state.
B) A shortage of college education opportunities in the state.
C) A decrease in equilibrium price for a college education in the state.
D) A decrease in equilibrium quantity for a college education in the state.

Question 71

If supply is constant,a decrease in the demand for potato chips will cause:

A) A decrease in equilibrium price and a decrease in equilibrium quantity.
B) An increase in equilibrium price and an increase in equilibrium quantity.
C) A decrease in equilibrium price and an increase in equilibrium quantity.
D) An increase in equilibrium price and a decrease in equilibrium quantity.

Question 72

If a market surplus exists:

A) The only resolution is for the government to set the price.
B) Consumers will compete for the product buy offering to pay more.
C) Producers will compete for customers by reducing prices.
D) The equilibrium price is equal to the price ceiling.

Question 73

If a market shortage exists:

A) The invisible hand will work to reduce the price.
B) The only solution is for the government to raise the price.
C) Producers will compete for customers by reducing prices.
D) Consumers will compete for the product by offering to pay more.

Question 74

If demand is constant,a leftward shift in the supply curve will result in:

A) A decrease in equilibrium quantity and a lower equilibrium price.
B) An increase in equilibrium quantity and a lower equilibrium price.
C) A decrease in equilibrium quantity and a higher equilibrium price.
D) An increase in equilibrium quantity and a higher equilibrium price.

Question 75

A market surplus occurs when:

A) People cannot buy the amount of goods and services that they are willing and able to buy.
B) The price is less than the equilibrium price.
C) The quantity supplied exceeds the quantity demanded at a given price.
D) There is a price ceiling.

Question 76

If demand is constant,a decrease in the supply of gasoline will cause the equilibrium price:

A) To rise and quantity to fall.
B) And quantity both to rise.
C) To fall and quantity to rise.
D) And quantity both to fall.

Question 77

If supply is unchanged,a rightward shift in the demand curve for gourmet ice cream will result in:

A) A decrease in equilibrium quantity and a higher equilibrium price.
B) An increase in equilibrium quantity and a higher equilibrium price.
C) A decrease in equilibrium quantity and a lower equilibrium price.
D) An increase in equilibrium quantity and a lower equilibrium price.

Question 78

If demand is unchanged,a rightward shift in the supply curve for plasma TVs will cause:

A) A decrease in equilibrium quantity and a higher equilibrium price.
B) An increase in equilibrium quantity and a higher equilibrium price.
C) An increase in equilibrium quantity and a lower equilibrium price.
D) A decrease in equilibrium quantity and a lower equilibrium price.

Question 79

A price ceiling does all of the following except:

A) Increases the quantity demanded relative to the equilibrium level.
B) Creates excess supply.
C) Creates a market shortage.
D) Decreases the quantity supplied relative to the equilibrium level.

Question 80

When there is a shortage in a market,prices are likely to:

A) Fall because buyers do not wish to buy as much as sellers want to sell.
B) Rise because some buyers will offer to pay a higher price.
C) Fall because sellers are likely to reduce their production if prices rise.
D) Rise because the government will put a price ceiling in place.