Deck 3: Demand and Supply

Question 1

The Demand for Chocolate-Covered Peanuts.
The principle stating that, for virtually all goods and services, there is a negative relationship between price and quantity demanded, all other things unchanged, is the law of:

A)supply.
B)demand.
C)scarcity.
D)increasing opportunity costs.

Answer 1

B

Question 2

Demand is best defined as the:

A)amount of a commodity that buyers would be willing and able to purchase at a specific price.
B)price that buyers would be willing and able to pay for a specific quantity of a good.
C)relationship between the price of a good and the quantity people are able to purchase and the independent variables that determine quantity.
D)relationship between the price of a good and the quantity people are willing and able to purchase and the independent variables that determine quantity.

Answer 2

D

Question 3

Demand is defined as:

A)an amount that is purchased at a specific price, given supply.
B)a schedule that establishes the price of a good.
C)a schedule that shows how much will be purchased at various prices during a particular period, all other things unchanged.
D)the amount that will be bought at a specific price.

Answer 3

C

Question 4

The relationship between the price of a good and the quantity people are willing and able to purchase and the independent variables that determine quantity is:

A)supply.
B)demand.
C)equilibrium.
D)disequilibrium.

Question 5

The Demand for Chocolate-Covered Peanuts.
(Exhibit: The Demand for Chocolate-Covered Peanuts)If the price of chocolate-covered peanuts increases from 40 cents to 50 cents, Dan will reduce his quantity demanded from 160 bags to 140 bags due to:

A)the law of demand.
B)the law of supply.
C)a decline in his income.
D)a change in his tastes and preferences.

Question 6

The Demand for Chocolate-Covered Peanuts.
(Exhibit: The Demand for Chocolate-Covered Peanuts)If George, Barbara, and Dan are the only three buyers in the market, and the price of a bag of chocolate-covered peanuts is 80 cents, the total market demand is ________ bags per month.

A)70
B)80
C)105
D)280

Question 7

The law of demand implies that:

A)consumers are not responsive to price changes.
B)consumers will, all other things unchanged, buy more at lower prices.
C)sellers will, all other things unchanged, offer more on the market at higher prices.
D)sellers will, all other things unchanged, offer less on the market at lower prices.

Question 8

Which of the following will result in an increased price of milk?

A)A shift to the right of the supply curve for milk.
B)A shift to the right of the demand curve for milk.
C)An increase in the number of milk suppliers.
D)A decrease in the number of milk buyers.

Question 9

The Demand for Chocolate-Covered Peanuts.
(Exhibit: The Demand for Chocolate-Covered Peanuts)If the price of chocolate-covered peanuts is 60 cents, the quantity demanded by George is ________ bags per month.

A)10
B)15
C)20
D)25

Question 10

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

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

Question 11

A decrease in the price of a good will, all other things unchanged, result in:

A)an increase in demand.
B)an increase in supply.
C)an increase in the quantity demanded.
D)more being supplied.

Question 12

The Demand for Chocolate-Covered Peanuts.
(Exhibit: The Demand for Chocolate-Covered Peanuts)If George is only able to purchase 30 bags of chocolate-covered peanuts, the maximum price he is willing and able to pay for each bag is ________ cents.

A)80
B)70
C)60
D)50

Question 13

The Demand for Chocolate-Covered Peanuts.
(Exhibit: The Demand for Chocolate-Covered Peanuts)If George, Barbara, and Dan are the only three buyers in the market, and the price of a bag of chocolate-covered peanuts is 50 cents, the total market demand is ________ bags per month.

A)80
B)105
C)210
D)280

Question 14

When economists study the behavior of buyers, they are studying:

A)supply.
B)the role of government.
C)demand.
D)psychology.

Question 15

The Demand for Chocolate-Covered Peanuts.

-A negative relationship between the quantity demanded and price is called the law of ______.

A)demand
B)diminishing marginal returns
C)market clearing
D)supply

Question 16

A decrease in the price of eggs, all other things unchanged, will result in a(n):

A)increase in the demand for eggs.
B)increase in the supply of eggs.
C)greater quantity of eggs supplied.
D)greater quantity of eggs demanded.

Question 17

A shift of a demand curve to the right, all other things unchanged, will:

A)increase equilibrium price and quantity.
B)decrease equilibrium price and quantity.
C)decrease quantity and increase price.
D)increase quantity and decrease price.

Question 18

The law of demand is illustrated when:

A)an increase in tuition encourages more students to enroll in college because the quality of education has risen.
B)an increase in the purchases of personal computers results from lower prices.
C)higher oil prices cause oil companies to drill for new sources of oil.
D)higher fees for the use of public golf courses force golfers to purchase fewer golf balls.

Question 19

The Demand for Chocolate-Covered Peanuts.
(Exhibit: The Demand for Chocolate-Covered Peanuts)If Barbara is only able to purchase 20 bags of chocolate-covered peanuts, the maximum price she is willing and able to pay for each bag is ________ cents.

A)90
B)80
C)70
D)60

Question 20

The demand curve for videos has shifted to the right.What could have caused it?

A)A fall in the price of videos.
B)An increase in the price of videos.
C)An increase in the supply of videos.
D)An increase in the income of buyers.

Question 21

(Exhibit: The Determinants of Demand and Supply)The exhibit shows how supply and demand might shift in response to specific events.Suppose the population increases.Which panel best describes how this will affect the market for apples?

A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Question 22

Given a supply curve that is positively sloped and a demand curve for a normal good that is negatively sloped, an increase in income will most likely result in:

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

Question 23

Reference: ma0324

-(Exhibit: The Demand for Videotape Rentals)A decrease in the price of movie tickets (a substitute)would result in a change illustrated by:

A)the move from f to g in Figure (a).
B)the move from h to i in Figure (b).
C)the move from j to k in Figure (c).
D)the move from l to m in Figure (d).

Question 24

Reference: ma0324

-(Exhibit: The Demand for Videotape Rentals)A decrease in the fee charged for videotape rentals would result in a change illustrated by:

A)the move from f to g in Figure (a).
B)the move from h to i in Figure (b).
C)the move from j to k in Figure (c).
D)the move from l to m in Figure (d).

Question 25

An increase in demand, all other things unchanged, will result in a(n)________ in the equilibrium price and a(n)________ in the equilibrium quantity.

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

Question 26

Which of the following most correctly states the law of demand?

A)As the price falls all other things unchanged, demand will go up.
B)As the price goes up, all other things unchanged, demand will go down.
C)As the price falls, all other things unchanged, the quantity demanded will go down.
D)As the price falls, all other things unchanged, the quantity demanded will increase.

Question 27

Which of the following would result in a movement along the demand curve?

A)a change in preferences
B)an increase in the number of buyers
C)an increase in the number of suppliers
D)a decrease in income

Question 28

It is true that the equilibrium quantity will always go up if supply:

A)and demand both increase.
B)increases and demand decreases.
C)and demand both decrease.
D)decreases and demand remains unchanged.

Question 29

(Exhibit: The Determinants of Demand and Supply)The exhibit shows how supply and demand might shift in response to specific events.Suppose a fall frost destroys one-third of the nation's orange crop.Which panel best describes how this will affect the market for Vitamin C tablets, which are a substitute for oranges?

A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Question 30

(Exhibit: The Determinants of Demand and Supply)The exhibit shows how supply and demand might shift in response to specific events.Suppose scientists discover that eating a tomato a day prevents aging.Which panel best describes how this will affect the market for tomatoes?

A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Question 31

Reference: ma0324

-(Exhibit: The Demand for Videotape Rentals)A decrease in the price of videotape recorders would result in a change illustrated by:

A)the move from f to g in Figure (a).
B)the move from h to i in Figure (b).
C)the move from j to k in Figure (c).
D)the move from l to m in Figure (d).

Question 32

Reference: ma0337
(Exhibit: Demand and Supply-Determinants)The exhibit shows how supply and demand might shift in response to specific events.Suppose a drought destroys one-third of the nation's peanut crop.Which panel best describes how this will affect the market for peanuts?

A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Question 33

Reference: ma0337
(Exhibit: Demand and Supply-Determinants)The exhibit shows how supply and demand might shift in response to specific events.Suppose a fall frost destroys one-third of the nation's grapefruit crop.Which panel best describes how this will affect the market for Vitamin B-12 tablets, which are a substitute for grapefruit?

A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Question 34

Reference: ma0337
(Exhibit: Demand and Supply-Determinants)The exhibit shows how supply and demand might shift in response to specific events.Suppose scientists discover that eating pomegranates causes premature aging.Which panel best describes how this will affect the market for pomegranates?

A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Question 35

If the price of a commodity increases, all of the things unchanged, you would expect the:

A)demand to decrease.
B)quantity demanded to increase.
C)quantity demanded to decrease.
D)demand curve to shift to the left.

Question 36

The primary difference between a change in demand and a change in the quantity demanded is:

A)a change in demand is a movement along the demand curve, and a change in quantity demanded is a shift in the demand curve.
B)a change in quantity demanded is a movement along the demand curve, and a change in demand is a shift in the demand curve.
C)both a change in quantity demanded and a change in demand are shifts in the demand curve, only in different directions.
D)both a change in quantity demanded and a change in demand are movements along the demand curve, only in different directions.

Question 37

(Exhibit: The Determinants of Demand and Supply)The exhibit shows how supply and demand might shift in response to specific events.Suppose consumer incomes increase.Which panel best describes how this will affect the market for used furniture, an inferior good?

A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Question 38

(Exhibit: The Determinants of Demand and Supply)The exhibit shows how supply and demand might shift in response to specific events.Suppose a fall frost destroys one-third of the nation's orange crop.Which panel best describes how this will affect the market for oranges?

A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Question 39

(Exhibit: The Determinants of Demand and Supply)The exhibit shows how supply and demand might shift in response to specific events.Suppose a new machine is developed that allows restaurants and fast-food outlets to produce French fries at a lower cost.Which panel best describes how this will affect the market for French fries?

A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Question 40

Reference: ma0337
(Exhibit: Demand and Supply-Determinants)The exhibit shows how supply and demand might shift in response to specific events.Suppose consumer incomes decrease.Which panel best describes how this will affect the market for used clothing, an inferior good?

A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Question 41

(Exhibit: Demand Shifters and Supply Shifters)The exhibit shows how supply and demand might shift in response to specific events.Suppose scientists discover that eating asparagus slows down the aging process.Which panel best describes how this will affect the market for asparagus?

A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Question 42

(Exhibit: Demand and Supply Shifters)The exhibit shows how supply and demand might shift in response to specific events.Suppose the price of lumber falls dramatically.Which panel best describes how this will affect the market for houses?

A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Question 43

Reference: ma0337
(Exhibit: Demand and Supply-Determinants)The exhibit shows how supply and demand might shift in response to specific events.Suppose the birth rate (the number of babies per female in the childbearing age bracket)decreases.Which panel best describes how this will affect the market for diapers?

A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Question 44

(Exhibit: Demand Shifters and Supply Shifters)The exhibit shows how supply and demand might shift in response to specific events.Suppose the birth rate (the number of babies per female in the childbearing age bracket)increases.Which panel best describes how this will affect the market for diapers?

A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Question 45

(Exhibit: Demand and Supply Shifters)The exhibit shows how supply and demand might shift in response to specific events.Suppose oil becomes more expensive.Which panel best describes how this will affect the market for gasoline, which is made from oil?

A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Question 46

There is an increase in incomes.What happens in the market for steak?

A)The equilibrium price falls, and the equilibrium quantity rises.
B)The equilibrium price rises, and the equilibrium price falls.
C)The equilibrium price and quantity rise.
D)The equilibrium price and quantity fall.

Question 47

Reference: ma0337
(Exhibit: Demand and Supply-Determinants)The exhibit shows how supply and demand might shift in response to specific events.Suppose the technology for producing automotive gasoline improves.Which panel best describes how this will affect the market for automotive gasoline?

A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Question 48

(Exhibit: Demand Shifters and Supply Shifters)The exhibit shows how supply and demand might shift in response to specific events.Suppose a spring frost destroys one-third of the nation's artichoke crop.Which panel best describes how this will affect the market for mayonnaise, which is a complement to artichokes?

A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Question 49

(Exhibit: Demand and Supply Shifters)The exhibit shows how supply and demand might shift in response to specific events.Suppose the Surgeon General announces that eating chocolate prevents heart disease.Which panel best describes how this will affect the market for chocolate?

A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Question 50

(Exhibit: Demand Shifters and Supply Shifters)The exhibit shows how supply and demand might shift in response to specific events.Suppose a wet and sunny year increases the nation's sweet corn crop by 20 percent.Which panel best describes how this will affect the market for frozen peas, a substitute for sweet corn?

A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Question 51

(Exhibit: Demand Shifters and Supply Shifters)The exhibit shows how supply and demand might shift in response to specific events.Suppose the technology for producing automotive gasoline improves.Which panel best describes how this will affect the market for automotive gasoline?

A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Question 52

(Exhibit: Demand Shifters and Supply Shifters)The exhibit shows how supply and demand might shift in response to specific events.Suppose consumer incomes increase.Which panel best describes how this will affect the market for tuxedoes, a normal good?

A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Question 53

(Exhibit: Demand and Supply Shifters)The exhibit shows how supply and demand might shift in response to specific events.Suppose half the people in San Diego move to Colorado Springs.Which panel best describes how this will affect the market for houses in Colorado Springs?

A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Question 54

(Exhibit: Demand Shifters and Supply Shifters)The exhibit shows how supply and demand might shift in response to specific events.Suppose a wet and sunny year increases the nation's corn crop by 20 percent.Which panel best describes how this will affect the market for corn?

A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Question 55

(Exhibit: Demand and Supply Shifters)The exhibit shows how supply and demand might shift in response to specific events.Suppose the technology for producing handheld calculators improves.Which panel best describes how this will affect the market for handheld calculators?

A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Question 56

(Exhibit: Demand and Supply Shifters)The exhibit shows how supply and demand might shift in response to specific events.Suppose a wet and sunny year increases the nation's sweet pea crop by 20 percent.Which panel best describes how this will affect the market for frozen sweet corn, a substitute for sweet peas?

A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Question 57

(Exhibit: Demand Shifters and Supply Shifters)The exhibit shows how supply and demand might shift in response to specific events.Suppose the technology for producing snowboards improves.Which panel best describes how this will affect the market for winter parkas, a complement of snowboards?

A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Question 58

(Exhibit: Demand and Supply Shifters)The exhibit shows how supply and demand might shift in response to specific events.Suppose consumer incomes increase.Which panel best describes how this will affect the market for dress ties, a normal good?

A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Question 59

(Exhibit: Demand and Supply Shifters)The exhibit shows how supply and demand might shift in response to specific events.Suppose half the people in San Diego pack up and move to Colorado Springs.Which panel best describes how this will affect the supply of houses in San Diego?

A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Question 60

Reference: ma0337
(Exhibit: Demand and Supply-Determinants)The exhibit shows how supply and demand might shift in response to specific events.Suppose the technology for producing automotive gasoline improves.Which panel best describes how this will affect the market for sports utility vehicles, a complement of automotive gasoline?

A)Panel (a)
B)Panel (b)
C)Panel (c)
D)Panel (d)

Question 61

When the price of gas goes up and the demand for tires goes down, this means tires and gas are:

A)substitutes.
B)complements.
C)both expensive.
D)both inexpensive.

Question 62

If a demand curve shifts to the left, then:

A)the equilibrium price would go up and the equilibrium quantity would go down.
B)the equilibrium price would go down and the equilibrium quantity would go up.
C)a lower equilibrium price and quantity would result.
D)a higher equilibrium price and quantity would result.

Question 63

An announcement that smoking will harm your ability to think clearly will most likely result in:

A)an increase in the quantity of cigarettes demanded.
B)a decrease in the demand for cigarettes.
C)no change in smoking habits.
D)an increase in the equilibrium price of cigarettes.

Question 64

Which of the following would not change the demand for automobiles?

A)a change in the price of gasoline
B)a change in the cost of steel
C)a change in the price of motorcycles
D)a change in tastes

Question 65

Demand and supply curves are drawn assuming ceteris paribus.This means that:

A)economists ignore all assumptions.
B)economists don't watch for the fallacy of false cause.
C)changes will be proportional.
D)all other things besides price and quantity are assumed unchanged.

Question 66

An example of a demand shifter is:

A)factor prices.
B)technology.
C)consumer preferences.
D)producer expectations.

Question 67

The price of cotton rises.What happens in the market for cotton shirts?

A)The equilibrium price falls and the equilibrium quantity rises.
B)The equilibrium price rises and the equilibrium quantity falls.
C)The equilibrium price and quantity rise.
D)The equilibrium price and quantity fall.

Question 68

The price of eggs might go up because:

A)of an increase in the price of bacon.
B)the price of chicken feed increased.
C)the supply of eggs increased.
D)the demand for eggs fell.

Question 69

Consumer preferences, prices of related goods, income, and demographic characteristics are often termed:

A)market technologies.
B)demand prices.
C)demand shifters.
D)supply determinants.

Question 70

Plastic and steel are substitutes in the production of automobiles.If steel prices go up, all other things unchanged:

A)the equilibrium price of plastic will fall.
B)the demand curve for plastic will shift to the left.
C)the demand curve for plastic will shift to the right.
D)the equilibrium quantity of plastic demanded will increase and the equilibrium price will fall.

Question 71

If the price of hamburger increases, it would probably result in ________ in the demand for hamburger buns.

A)a decrease
B)an increase
C)no change
D)random fluctuations

Question 72

A shift in the demand curve to the left, all other things unchanged:

A)will cause the supply curve to shift to the left, too.
B)will cause a movement upward along the supply curve and a higher equilibrium price.
C)will cause a movement downward along the supply curve and a lower equilibrium quantity.
D)will result in a lower equilibrium price and greater equilibrium quantity.

Question 73

The price of apples falls.What happens in the market for apple pies?

A)The equilibrium price falls, and the equilibrium quantity rises.
B)The equilibrium price rises, and the equilibrium quantity falls.
C)The equilibrium price and quantity rise.
D)The equilibrium price and quantity fall.

Question 74

Which of the following is true?

A)If demand decreases, equilibrium price increases.
B)If demand increases, equilibrium price decreases.
C)If demand decreases, the demand curve shifts to the left.
D)If demand decreases, the demand curve shifts to the right.

Question 75

For most consumers, videocassette recorders and videocassettes are likely to be:

A)substitute goods.
B)complementary goods.
C)inferior goods.
D)independent goods.

Question 76

If people demand more of product A when the price of B falls, then A and B are:

A)not related.
B)substitutes.
C)complements.
D)inferior.

Question 77

Which of the following will not cause the demand for milk (a normal good)to increase in the current time period?

A)a fall in the price of milk
B)an increase in income
C)an expected increase in milk prices
D)a decrease in the price of cookies (a complement)

Question 78

Researchers demonstrate conclusively that drinking 4-6 ounces of ginger ale each day increases life expectancy by 3 years.What happens in the market for ginger ale?

A)The equilibrium price falls, and the equilibrium quantity rises.
B)The equilibrium price rises, and the equilibrium quantity falls.
C)The equilibrium price and quantity rise.
D)The equilibrium price and quantity fall.

Question 79

The price of oranges rises.What happens in the market for apples, which are a substitute for oranges?

A)The equilibrium price falls, and the equilibrium quantity rises.
B)The equilibrium price rises, and the equilibrium quantity falls.
C)The equilibrium price and quantity rise.
D)The equilibrium price and quantity fall.

Question 80

The price of oranges falls.What happens in the market for apples, which are a substitute for oranges?

A)The equilibrium price falls and the equilibrium quantity rises.
B)The equilibrium price rises and the equilibrium quantity falls.
C)The equilibrium price and quantity rise.
D)The equilibrium price and quantity fall.