Deck 3: Supply and Demand

Question 1

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

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

Answer 1

B

Question 2

Which of the following factors would result solely in a movement along the demand curve for a particular good?

A) a change in the prices of related goods
B) a change in the price of that good
C) a change in the size of the population
D) both a change in the price of that good and a change in the size of the population

Answer 2

B

Question 3

In much of the country, homeowners choose to heat their houses with either natural gas or heating oil. Which of the following would cause an increase in the demand for natural gas?

A) an increase in the price of natural gas
B) a decrease in the price of natural gas
C) a decrease in the price of heating oil
D) an increase in consumer incomes

Answer 3

D

Question 4

The _____ apples will decrease when apple prices rise.

A) demand for
B) quantity demanded of
C) supply of
D) equilibrium of

Question 5

A decrease in the price of eggs will result in an increase in the:

A) demand for eggs.
B) supply of eggs.
C) quantity of eggs supplied.
D) quantity of eggs demanded.

Question 6

A shift of the demand curve for thin-crust pizza would NOT be caused by a change in:

A) buyers' incomes.
B) the price of thin-crust pizza.
C) the price of thick-crust pizza.
D) the popularity of thin-crust pizza.

Question 7

Which of the following best exemplifies the law of demand?

A) As income taxes rise, fewer new cars are purchased.
B) As the price of corn rises, more acres of corn are planted.
C) As the price of a car rental rises, fewer cars are rented.
D) As the population rises, more electricity is consumed.

Question 8

Which of the following illustrates the law of demand?

A) An increase in tuition encourages more students to enroll in college because the quality of education has risen.
B) Consumers buy more personal computers because prices have fallen.
C) Oil companies drill for new sources because prices are higher.
D) Fewer people play golf because incomes are lower.

Question 9

Raclette is a popular wintertime dish in Switzerland. It is essentially melted Raclette cheese over boiled new potatoes. If the price of Raclette cheese decreased, we would expect to see:

A) an increase in demand for Raclette cheese.
B) an increase in demand for new potatoes.
C) no effect on the demand for either of the Raclette ingredients, since this is a traditional dish and its consumption does not depend on the prices of the ingredients.
D) an increase in demand for Raclette cheese and for new potatoes.

Question 10

_____ illustrates an inverse relationship between price and quantity.

A) A demand curve
B) A supply curve
C) A production possibility frontier
D) Equilibrium

Question 11

Which of the following best describes demand?

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 12

The law of demand implies that:

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

Question 13

If goods A and B are substitutes, a decrease in the price of good B will:

A) increase the demand for good A.
B) increase the demand for good B.
C) decrease the demand for good A.
D) increase the demand for good B and decrease the demand for good A.

Question 14

A decrease in the price of a good will result in:

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

Question 15

Which of the following statements is CORRECT?

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

Question 16

The law of demand states that other things equal, as the price:

A) increases, the quantity demanded will increase.
B) decreases, the demand curve will shift to the right.
C) increases, demand will decrease.
D) increases, the quantity demanded will decrease.

Question 17

When the economy turns down and the incomes of many people decrease, vacationers are more likely to take car trips than to fly. Which of the following provides one possible explanation for this phenomenon?

A) Air travel and travel by car are complementary goods.
B) Air travel and travel by car are both normal goods.
C) Air travel is a normal good and travel by car is an inferior good.
D) Air travel is an inferior good and travel by car is a normal good.

Question 18

The market for corn in Kansas is considered to be competitive. This means there are _____ buyers and _____ sellers of corn in Kansas.

A) many; few
B) few; many
C) many; many
D) few; few

Question 19

A negative relationship between quantity demanded and price is called the law of:

A) demand.
B) increasing returns.
C) market clearing.
D) supply.

Question 20

A negative relationship between the quantity demanded and price is called the law of:

A) demand.
B) marginality.
C) efficiency.
D) supply.

Question 21

For most goods, purchases tend to rise with increases in buyers' incomes and to fall with decreases in buyers' incomes. Such goods are known as:

A) inferior.
B) direct.
C) normal.
D) indirect.

Question 22

Which of the following is TRUE of a normal good?

A) When income increases, the demand for the good remains unchanged.
B) When income increases, the demand for the good decreases.
C) When income increases, the demand for the good increases.
D) Income and the demand are unrelated.

Question 23

Which of the following will NOT cause an increase in demand for good X?

A) a decrease in income if good X is an inferior good
B) an increase in income if good X is a normal good
C) a decrease in the price of good X
D) an increase in consumers' taste for good X

Question 24

If the demand for tires goes down when the price of gas goes up, then tires and gas are:

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

Question 25

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 incomes of buyers

Question 26

An inferior good is one for which a(n) _____ in buyers' income causes a(n) _____.

A) increase; increase in demand
B) increase; increase in quantity demanded
C) increase; decrease in demand
D) decrease; decrease in demand

Question 27

If goods A and Z are complements, an increase in the price of good Z will:

A) increase the demand for good A.
B) decrease the demand for good A.
C) decrease the demand for good Z.
D) decrease the demand for both good A and good Z.

Question 28

Which of the following is likely to cause a rightward shift in the demand for home-delivered pizza?

A) a lower price of pizza
B) a lower price of fast-food hamburgers
C) a higher price of pepperoni
D) a larger population

Question 29

Pizza is a normal good. If students' incomes at your college increase, the effect on pizza will be:

A) an increase in the demand.
B) an increase in the quantity demanded.
C) a decrease in the demand.
D) no change in the demand.

Question 30

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

A) a decrease in the price of paper
B) a fall in the price of used textbooks
C) an increase in college enrollment
D) a fall in the price of new textbooks

Question 31

Which of the following is TRUE of an inferior good?

A) When income increases, demand remains unchanged.
B) When income increases, demand decreases.
C) When income increases, demand increases.
D) Income and demand are unrelated.

Question 32

Which of the following describes two goods that are most likely substitutes in consumption?

A) loaves of bread and sticks of butter
B) loaves of bread and toasters
C) loaves of bread and hamburger buns
D) loaves of bread and gasoline

Question 33

If chicken and beef are substitutes, then a fall in the price of chicken will bring about:

A) an increase in the demand for beef.
B) a decrease in the demand for beef.
C) a decrease in the quantity demanded of beef.
D) no change in the demand for beef.

Question 34

If steak and potatoes are complements, when the price of steak goes up, the demand curve for potatoes:

A) shifts to the right.
B) shifts to the left.
C) stays the same.
D) shifts to the right and then moves back.

Question 35

Over the past several years, consumers have had an increasing interest in getting tattoos. This means that the _____ for tattoos has _____.

A) quantity demanded; increased
B) demand; decreased
C) demand; increased
D) quantity demanded; decreased

Question 36

After graduation from college, you might have an increase in your income from a new job. If as a result you decide that you will purchase more T-bone steak and less hamburger, then for you hamburger is a(n) _____ good.

A) normal
B) substitute
C) complementary
D) inferior

Question 37

An increase in the price of hamburger would probably result in _____ in the demand for hamburger buns.

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

Question 38

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 price of cigarettes.

Question 39

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 goods.

Question 40

An increase in the demand for gasoline today caused by concerns that gasoline prices will be higher tomorrow is most likely attributable to a change in:

A) income.
B) consumer expectations.
C) consumer preferences.
D) prices of other goods.

Question 41

Use the following to answer questions:
Figure: Supply of Coconuts
(Figure: Supply of Coconuts) Look at the figure Supply of Coconuts. An expectation on the part of coconut suppliers that the price of coconuts will be significantly higher in the very near future would be represented in the figure as a movement from:

A) A to B.
B) B to A.
C) A to C.
D) B to E.

Question 42

In the market for canned pinto beans, _____ will increase if income increases and if pinto beans are a(n) _____ good.

A) demand; inferior
B) demand; normal
C) supply; inferior
D) supply; normal

Question 43

When the price of gas goes down, the demand for tires goes up. A likely possibility is that tires and gas are:

A) substitutes.
B) complements.
C) both inferior goods.
D) both inexpensive.

Question 44

When the price of armchairs increases, the:

A) quantity supplied increases.
B) supply increases.
C) quantity supplied decreases.
D) supply decreases.

Question 45

Use the following to answer questions:
Figure: The Supply of DVD Rentals
(Figure: The Supply of DVD Rentals) Look at the figure The Supply of DVD Rentals. A decrease in the price of DVDs sold by movie producers to rental stores would result in a change illustrated by the move from:

A) n to o in panel A.
B) p to q in panel B.
C) s to t in panel C.
D) u to v in panel D.

Question 46

The typical supply curve illustrates that:

A) other things equal, the quantity supplied for a good is inversely related to the price of a good.
B) other things equal, the supply of the good creates its own demand for the good.
C) other things equal, the quantity supplied for a good is positively related to the price of a good.
D) price and quantity supplied are unrelated.

Question 47

Use the following to answer questions:
Figure: The Supply of DVD Rentals
(Figure: The Supply of DVD Rentals) Look at the figure The Supply of DVD Rentals. A decrease in the price of DVD rentals would result in a change illustrated by the move from:

A) n to o in panel A.
B) p to q in panel B.
C) s to t in panel C.
D) u to v in panel D.

Question 48

The demand for meals at a local Applebee's will shift to the left if:

A) the Olive Garden offers a 10 percent discount coupon in the local newspaper.
B) the price of a meal at Applebee's rises.
C) local incomes increase and Applebee's is a normal good.
D) the price of gasoline falls in the area.

Question 49

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

A) a fall in the price of running shoes
B) an increase in the price of running shoes
C) an increase in the supply of running shoes
D) an increase in the income of buyers of running shoes

Question 50

Assuming that desktop computers are normal goods, which of the following will NOT increase demand for desktop computers?

A) an increase in the incomes of computer users
B) cool new computer games that can only be played on desktop computers
C) a very large computer company going out of business
D) the price of notebook computers increasing

Question 51

_____ illustrates a positive relationship between price and quantity.

A) A demand curve
B) A supply curve
C) A production possibility frontier
D) Equilibrium

Question 52

Which of the following will NOT cause an increase in the supply of cornflakes?

A) an increase in the price of cornflakes
B) a cost-saving improvement in the technology of corn production
C) a reduction in the price of corn
D) the expectation by producers that the price of cornflakes will fall in the future

Question 53

When the price of lamps increases, the:

A) supply increases.
B) quantity supplied increases.
C) supply decreases.
D) quantity supplied decreases.

Question 54

Use the following to answer questions:
Figure: Supply of Coconuts
(Figure: Supply of Coconuts) Look at the figure Supply of Coconuts. If the prices of inputs (e.g., labor, fertilizer, and fuel) used to produce and transport coconuts decreased, it would be represented in the figure as a movement from:

A) A to B.
B) B to A.
C) C to A.
D) E to B.

Question 55

Use the following to answer questions:
Figure: Supply of Coconuts
(Figure: Supply of Coconuts) Look at the figure Supply of Coconuts. If the prices of inputs (e.g., labor, fertilizer, and fuel) used to produce and transport coconuts increased, it would be represented in the figure as a movement from:

A) A to B.
B) B to A.
C) C to A.
D) E to B.

Question 56

Use the following to answer questions:
Figure: Supply of Coconuts
(Figure: Supply of Coconuts) Look at the figure Supply of Coconuts. If the price of coconuts decreased, it would be represented in the figure as a movement from:

A) A to B.
B) B to A.
C) C to A.
D) E to B.

Question 57

Use the following to answer questions:
(Table: Supply of Lemonade) Look at the table Supply of Lemonade. When the price of lemonade is $1 per cup, the quantity of lemonade supplied by Eli will be:

A) 40 cups.
B) 90 cups.
C) 10 cups.
D) 25 cups.

Question 58

If the price of hamburger decreased, it would probably result in _____ in the demand for hamburger buns.

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

Question 59

Use the following to answer questions:
Figure: Supply of Coconuts
(Figure: Supply of Coconuts) Look at the figure Supply of Coconuts. An improvement in the technology used to harvest coconuts (e.g., a faster, less expensive coconut picker) would be represented in the figure as a movement from:

A) A to C.
B) B to A.
C) C to A.
D) B to E.

Question 60

Use the following to answer questions:
(Table: Supply of Lemonade) Look at the table Supply of Lemonade. If the price of lemonade is $1 per cup, the total quantity of lemonade supplied will be:

A) 50 cups.
B) 80 cups.
C) 25 cups.
D) 90 cups.

Question 61

An increase in the supply of a good is caused by:

A) input prices rising.
B) a fall in the price of the good.
C) an increase in the number of sellers.
D) expectations of future price increases.

Question 62

In the local market for coffee, if Joyce's Java and Everyday Joe's coffee shops go out of business, the _____ curve shifts to the _____.

A) supply; right
B) demand; left
C) supply; left
D) demand; right

Question 63

Which of the following is NOT a determinant of supply?

A) expectations regarding future prices
B) the technology of production
C) the cost of production
D) consumer tastes

Question 64

Which of the following influences does NOT shift the supply curve?

A) people deciding that they want to buy more of the product
B) a decrease in the price firms expect to receive in the future
C) a rise in the wages paid to workers
D) the development of a new production technology

Question 65

Consider the supply curve for cotton shirts. An increase in the price of cotton will:

A) increase the supply of cotton shirts.
B) decrease the supply of cotton shirts.
C) increase the quantity supplied of cotton shirts.
D) decrease the demand for cotton shirts.

Question 66

Which of the following would NOT cause the supply curve to shift?

A) a change in the technology of production
B) a change in factor costs
C) a change in the price of the good
D) a change in suppliers' expectations of future prices

Question 67

In the market for tacos, each of the following shifts the supply curve to the left EXCEPT:

A) an increase in the price of beef.
B) an increase in the wages of taco shop workers.
C) fewer taco shops.
D) a decrease in the price of tacos.

Question 68

A decrease in supply is caused by:

A) a decrease in input prices.
B) an increase in the number of sellers in the market.
C) suppliers' expectations of higher prices in the future.
D) an advancement in the technology for producing the good.

Question 69

An increase in supply is caused by:

A) an increase in input prices.
B) a decrease in the number of sellers in the market.
C) suppliers' expectations of higher prices in the future.
D) an advancement in the technology for producing the good.

Question 70

A technological advance in the production of automobiles will _____ the _____ automobiles.

A) decrease; demand for
B) increase; supply of
C) decrease; demand
D) decrease; supply of

Question 71

A decrease in supply means:

A) a shift to the left of the entire supply curve.
B) a movement down the supply curve as prices go down.
C) that less will be demanded at every price.
D) that more will be supplied at every price.

Question 72

A decrease in supply is caused by:

A) an increase in the price of goods that are used in production.
B) suppliers' expectations of lower prices in the future.
C) an advancement in the technology for producing the good.
D) an increase in the number of producers.

Question 73

Which of the following will NOT cause an increase in the supply of good X?

A) an improvement in the technology used to produce good X
B) a decrease in the price of good Y, a substitute in production
C) an increase in the price of inputs used to produce good X
D) a decrease in the price of inputs used to produce good X

Question 74

Over the past few years, the technology associated with producing flat-panel televisions has improved. This has led to a(n) _____ in the _____ flat-panel televisions.

A) increase; supply of
B) decrease; demand for
C) decrease; supply of
D) decrease; quantity supplied of

Question 75

An increase in supply is caused by:

A) an increase in input prices.
B) suppliers' expectations of higher prices in the future.
C) an increase in the price of the good.
D) a decrease in the price of resources used in production.

Question 76

The primary difference between a change in supply and a change in the quantity supplied is that:

A) a change in quantity supplied is a movement along the supply curve, while a change in supply is a shift in the supply curve.
B) both a change in quantity supplied and a change in supply are movements along the supply curve, only in different directions.
C) a change in supply is related to the supply curve, while a change in quantity supplied is related to shifts in the demand curve that elicit a change in supply.
D) a change in supply is a movement along the supply curve, while a change in quantity supplied is a shift in the supply curve.

Question 77

If the price of a commodity increases, you can expect the:

A) supply to increase.
B) quantity supplied to increase.
C) quantity supplied to decrease.
D) supply curve to shift to the right.

Question 78

A leftward shift of a supply curve is caused by:

A) an increase in the number of sellers.
B) a technological improvement in production.
C) an increase in the cost of an input.
D) an increase in the number of buyers.

Question 79

If the price of mozzarella cheese (an ingredient in pizza) declines, there will be:

A) a decrease in the supply of pizza.
B) an increase in the supply of pizza.
C) a decrease in the quantity of pizza supplied.
D) no change in the supply of pizza.

Question 80

Which of the following is most likely to shift the supply of milk to the right?

A) a tax on each gallon of milk produced
B) an increase in household income, milk being a normal good
C) a decrease in the price of feed given to dairy cows
D) the bankruptcy of many small dairy farms