Deck 3: The Supply and Demand Model

Question 1

The concept of the invisible hand is attributed to:

A) Alexander Hamilton.
B) Steve Jobs.
C) Donald Trump.
D) Adam Smith.

Answer 1

D

Question 2

In a _____ market, the product is homogeneous, and there are many buyers and sellers.

A) monopoly
B) competitive
C) simple
D) complex

Answer 2

B

Question 3

The economic principle stating that a negative relationship exists between price and quantity demanded, ceteris paribus, is known as the law of:

A) the economy.
B) demand.
C) the invisible hand.
D) free markets.

Answer 3

B

Question 4

A negative relationship between price and quantity demanded implies that as price:

A) goes up, quantity demanded falls.
B) goes up, quantity demanded rises.
C) falls, quantity demanded falls.
D) falls, quantity demanded is unchanged.

Question 5

What is suggested when we say that there is a negative relationship between price and the quantity demanded of a good?

A) As price goes up, quantity demanded falls.
B) As price goes up, quantity demanded rises.
C) As price falls, quantity demanded falls.
D) As price falls, quantity demanded is unchanged.

Question 6

According to the law of demand, ceteris paribus, when the price of roses goes up, what happens to the quantity demanded for roses?

A) Because roses are a favorite flower, more roses are bought.
B) Because the price has increased, fewer roses are demanded.
C) Because it is Mother's Day, more roses are bought.
D) Because the price has increased, florists do not stock as many roses.

Question 7

What does the expression "↑P results in ↓Q_d" imply?

A) As price goes up, quantity demanded falls.
B) As price goes up, quantity demanded rises.
C) As price falls, quantity demanded falls.
D) As price falls, quantity demanded increases.

Question 8

What does the expression "↓P results in ↑Q_d" imply?

A) As price goes up, quantity demanded falls.
B) As price goes up, quantity demanded rises.
C) As price falls, quantity demanded falls.
D) As price falls, quantity demanded increases.

Question 9

The ______ effect describes the change in consumer purchasing power that occurs when the price of a good changes.

A) demand
B) supply
C) income
D) substitution

Question 10

The price of Selina's car insurance just doubled. What has happened to Selina's purchasing power?

A) Purchasing power has decreased.
B) Purchasing power has increased.
C) Purchasing power is not affected.
D) Purchasing power does not apply.

Question 11

(Figure: Leslie's Individual Demand Curve) At a price of $8, how many snacks is Leslie willing to purchase?

A) 0
B) 1
C) 3
D) 6

Question 12

(Figure: Galina's Individual Demand Curve) At a price of $5, how many snacks is Galina willing to purchase?

A) 0
B) 1
C) 3
D) 6

Question 13

(Figure: Maksym's Individual Demand Curve) At a price of $10, Maksym willing to purchase _____ for a total cost to him of:

A) 0; 0.
B) 1; $12.
C) 2; $20.
D) 5; $30.

Question 14

The income effect and the substitution effect help explain the law of:

A) demand.
B) supply.
C) opportunity cost.
D) competitive markets.

Question 15

As the price of gas goes up, Toni has less purchasing power. This is an example of the _____ effect.

A) substitution
B) demand
C) increasing cost
D) income

Question 16

As the price of the dog food that Michelle feeds her dog falls, Michelle has more purchasing power. This is an example of the _____ effect.

A) substitution
B) demand
C) increasing cost
D) income

Question 17

The price of chicken has doubled. As a result, Andre will purchase pork instead of chicken. This is an example of the _____ effect.

A) substitution
B) demand
C) increasing cost
D) income

Question 18

The price of chicken has doubled. According to the ______ effect, Andrea will purchase _____ chicken and more peanut butter instead.

A) substitution; less
B) substitution; more
C) income; less
D) income; more

Question 19

The amount of a good that sellers are willing and able to provide at a specific price is known as:

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

Question 20

The economic principle stating that a positive relationship exists between price and quantity supplied, ceteris paribus, is the law of:

A) supply.
B) demand.
C) the invisible hand.
D) free markets.

Question 21

A positive relationship between price and quantity supplied implies that as price:

A) goes up, quantity supplied falls.
B) goes up, quantity supplied rises.
C) falls, supply falls.
D) goes up, supply goes up.

Question 22

What is suggested when we say that there is a positive relationship between price and quantity supplied of a good?

A) As price goes up, quantity supplied falls.
B) As price goes up, supply rises.
C) As price falls, quantity supplied falls.
D) As price falls, supply falls.

Question 23

According to the law of supply, ceteris paribus, when the price of ballroom dance lessons goes up, _____ ballroom dance lessons:

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

Question 24

What does the expression "↓P results in ↓Qs" imply?

A) As price falls, supply falls.
B) As price increases, supply rises.
C) As price falls, quantity supplied falls.
D) As price increases, supply increases.

Question 25

The sum of individual demand for a product at each price is:

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

Question 26

The sum of individual supply for a product at each price is:

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

Question 27

(Figure: Market Demand Schedule 0) What is the market quantity demanded at a price of $12?
$\quad\quad\quad\quad\quad\quad\quad\quad\quad\text { Individual Quantity Demanded }$
$\begin{array}{|c|c|c|c|c|}\hline \text { Price per Unit } & \text { Jan } \quad\quad& \text { Rose } \quad\quad& \text { Angel } \quad\quad& \text { Market Quantity Demanded } \\\hline \$ 24 & 2 & 3 & ? & 5 \\\hline 18 & 3 & ? & 1 & 9 \\\hline 12 & 5 & 6 & 3 & ? \\\hline 6 & 6 & 7 & 4 & 17 \\\hline\end{array}$

A) 6
B) 12
C) 14
D) 17

Question 28

(Figure: Market Demand Schedule 0) What is Rose's quantity demanded at a price of $18?
$\quad\quad\quad\quad\quad\quad\quad\quad\quad\text { Individual Quantity Demanded }$
$\begin{array}{|c|c|c|c|c|}\hline \text { Price per Unit } & \text { Jan } \quad\quad& \text { Rose } \quad\quad& \text { Angel } \quad\quad& \text { Market Quantity Demanded } \\\hline \$ 24 & 2 & 3 & ? & 5 \\\hline 18 & 3 & ? & 1 & 9 \\\hline 12 & 5 & 6 & 3 & ? \\\hline 6 & 6 & 7 & 4 & 17 \\\hline\end{array}$

A) 3
B) 5
C) 6
D) 9

Question 29

(Figure: Market Demand Schedule 0) What is Angel's quantity demanded at a price of $24?
$\quad\quad\quad\quad\quad\quad\quad\quad\quad\text { Individual Quantity Demanded }$
$\begin{array}{|c|c|c|c|c|}\hline \text { Price per Unit } & \text { Jan } \quad\quad& \text { Rose } \quad\quad& \text { Angel } \quad\quad& \text { Market Quantity Demanded } \\\hline \$ 24 & 2 & 3 & ? & 5 \\\hline 18 & 3 & ? & 1 & 9 \\\hline 12 & 5 & 6 & 3 & ? \\\hline 6 & 6 & 7 & 4 & 17 \\\hline\end{array}$

A) 0
B) 3
C) 4
D) 5

Question 30

(Figure: Market Supply Schedule 0) What is the quantity supplied by Andrey at a price of $15?

$\quad\quad\quad\quad\quad\quad\quad\quad\text { Individual Quantity Supplied }$
$\begin{array}{|c|c|c|c|c|}\hline \text {Price per Unit } & \text { Miguel } & \text { Andrey } & \text { Justin } & \text { Market Quantity Supplied } \\\hline \$ 25 & 3 & 7 & 4 & ? \\\hline 20 & 2 & 5 & 3 & ? \\\hline 15 & 1 & ? & 1 & 6 \\\hline 5 & 0 & 3 & 1 & 4 \\\hline\end{array}$

A) 3
B) 4
C) 5
D) 6

Question 31

(Figure: Market Supply Schedule 0) What is the quantity supplied by the market at a price of $20?

$\quad\quad\quad\quad\quad\quad\quad\quad\text { Individual Quantity Supplied }$
$\begin{array}{|c|c|c|c|c|}\hline \text {Price per Unit } & \text { Miguel } & \text { Andrey } & \text { Justin } & \text { Market Quantity Supplied } \\\hline \$ 25 & 3 & 7 & 4 & ? \\\hline 20 & 2 & 5 & 3 & ? \\\hline 15 & 1 & ? & 1 & 6 \\\hline 5 & 0 & 3 & 1 & 4 \\\hline\end{array}$

A) 4
B) 6
C) 8
D) 10

Question 32

(Figure: Market Supply Schedule 0) What is the quantity supplied by the market at a price of $25?

$\quad\quad\quad\quad\quad\quad\quad\quad\text { Individual Quantity Supplied }$
$\begin{array}{|c|c|c|c|c|}\hline \text {Price per Unit } & \text { Miguel } & \text { Andrey } & \text { Justin } & \text { Market Quantity Supplied } \\\hline \$ 25 & 3 & 7 & 4 & ? \\\hline 20 & 2 & 5 & 3 & ? \\\hline 15 & 1 & ? & 1 & 6 \\\hline 5 & 0 & 3 & 1 & 4 \\\hline\end{array}$

A) 4
B) 6
C) 8
D) 14

Question 33

_____ is the point where the market supply curve intersects the market demand curve.

A) Surplus
B) Equilibrium
C) Shortage
D) Point X

Question 34

Where quantity supplied equals quantity demanded, the market is experiencing:

A) recession.
B) excess surplus.
C) excess demand.
D) equilibrium.

Question 35

What is another name for excess supply?

A) inventory
B) surplus
C) shortage
D) equilibrium

Question 36

Under conditions of excess supply, prices are _____ equilibrium.

A) equal to
B) below
C) above
D) not relative to

Question 37

Under conditions of excess demand, prices are _____ equilibrium.

A) equal to
B) below
C) above
D) not relative to

Question 38

What is another name for excess demand?

A) inventory
B) surplus
C) shortage
D) equilibrium

Question 39

(Figure: Equilibrium) What is the equilibrium price?

A) 10
B) 8
C) 3
D) 5

Question 40

(Figure: Equilibrium) What is the equilibrium quantity?

A) 10
B) 8
C) 3
D) 5

Question 41

(Figure: Equilibrium) At a price of $10, there is a _____ of ____ units.

A) shortage; 2
B) shortage; 4
C) surplus; 2
D) surplus; 4

Question 42

(Figure: Equilibrium) If the price is $12, what is the quantity supplied?

A) 10
B) 8
C) 3
D) 5

Question 43

(Figure: Equilibrium) At a price of $12, a _____ of _____ exists.

A) surplus; 2
B) surplus; 4
C) shortage; 2
D) shortage; 4

Question 44

(Figure: Equilibrium) At a price of $6, a _____ of _____ exists.

A) surplus; 2
B) surplus; 4
C) shortage; 2
D) shortage; 4

Question 45

The willingness of consumers to purchase a product at given price is known as:

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

Question 46

Something other than price that affects a consumer's willingness to buy is known as a change in:

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

Question 47

Ramon is willing to purchase three sandwiches at a price of $8 for each sandwich. If the price of each sandwich increases to $10, Ramon is willing to purchase only two sandwiches. This is known as a change in:

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

Question 48

Ramon is willing to purchase three sandwiches at a price of $8 for each sandwich. Ramon's employer just cut back on the number of overtime hours that Ramon can work. Now Ramon is buying only two sandwiches. This shift is known as a change in:

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

Question 49

When there is a change in demand, the demand curve:

A) shifts to the right.
B) shifts to the left.
C) shifts either to the left or right.
D) does not move.

Question 50

When there is a change in supply, the supply curve:

A) shifts to the right.
B) shifts to the left.
C) shifts either to the left or right.
D) does not move.

Question 51

If the demand curve shifts to the right, demand:

A) decreases.
B) remains the same.
C) increases.
D) doubles.

Question 52

If the demand curve shifts to the left, demand:

A) decreases.
B) remains the same.
C) increases.
D) doubles.

Question 53

(Figure: Double Shift) The market is currently at equilibrium at point
The market is currently at equilibrium at point C. Which of these represents a decrease in quantity demanded, but not a change in demand?

A) Point A
B) Point B
C) Point C
D) Point D

Question 54

(Figure: Double Shift 0) The market is currently at equilibrium at point

A) Point A
B) Point B
C) Point C
D) Point D

Question 55

(Figure: Double Shift A) The market is currently at equilibrium at point
The market is currently at equilibrium at point A. Which of these represents an increase in quantity demanded, but not a change in demand?

A) Point A
B) Point B
C) Point C
D) Point D

Question 56

(Figure: Double Shift I) The market is currently at equilibrium at point
The market is currently at equilibrium at point B. Which of these represents a decrease in quantity demanded?

A) Point A
B) Point B
C) Point C
D) Point D

Question 57

(Figure: Double Shift) The market is currently at equilibrium at point
The market is currently at equilibrium at point C. Which of these represents a decrease in demand, but no change in supply?

A) Point A
B) Point B
C) Point C
D) Point D

Question 58

(Figure: Double Shift 0) The market is currently at equilibrium at point
The market is currently at equilibrium at point D. Which of these represents a decrease in demand?

A) Point A
B) Point B
C) Point C
D) Point D

Question 59

(Figure: Double Shift A) The market is currently at equilibrium at point
The market is currently at equilibrium at point A. Which of these represents an increase in demand, but not supply?

A) Point A
B) Point B
C) Point C
D) Point D

Question 60

(Figure: Double Shift I) The market is currently at equilibrium at point
The market is currently at equilibrium at point B. Which of these represents an increase in demand, but no change in supply?

A) Point A
B) Point B
C) Point C
D) Point D

Question 61

A good is _____ good if demand decreases as income increases.

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

Question 62

Maneesh received a raise at work. As a result, he no longer buys hamburger. For Maneesh, hamburger is _____ good.

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

Question 63

Selma lost her job when her company downsized. As a result, Selma now purchases more hamburger. For Selma, hamburger is _____ good.

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

Question 64

Aaron received a promotion at work. As a result, he eats out at restaurants more. For Aaron, eating out at restaurants is _____ good.

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

Question 65

Dolly lost her job when her company downsized. As a result, Dolly no longer takes vacations. For Dolly, vacations are _____ good.

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

Question 66

Products that are usually consumed together are ______ goods.

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

Question 67

Products for which an increase in the price of one good reduces demand for the other good are _____ goods.

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

Question 68

Which of the following products are generally complements?

A) baseball bat and football
B) steak and chicken
C) smartphone and data plan
D) car and truck

Question 69

A car and gasoline can be classified as:

A) luxury goods.
B) inferior goods.
C) substitutes.
D) complements.

Question 70

Products that serve the same purpose are ____ goods.

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

Question 71

Products for which an increase in price for one good increases demand for the other good are _____ goods.

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

Question 72

Which of the following products are generally substitutes?

A) baseball bat and boat
B) pork and chicken
C) smartphone and data plan
D) car and eyeglasses

Question 73

Every member of the current graduating class at Greengrass College received a job offer. As a result, most bought new cars. What did this do to the demand curve for cars?

A) It shifted to the left.
B) It remained unchanged.
C) It shifted to the right.
D) It resulted in a movement along the curve.

Question 74

Recently, the health benefits of eggs have been publicized. As a result, the demand curve for eggs has:

A) shifted to the left.
B) remained unchanged.
C) shifted to the right.
D) resulted in a movement along the curve.

Question 75

Recent research has discovered that consumers are drinking less soda because of a decline in its popularity. Which determinant of demand does this represent?

A) changes in income
B) changes in buyers' expectations
C) changes in the price of related goods
D) changes in tastes and preferences

Question 76

The baby boomer generation is retiring. Which industry would be expected to experience an increase in demand?

A) nursing homes
B) baby crib manufacturers
C) swimming pools
D) extreme sports

Question 77

Turkey and chicken are substitutes. The price of turkey falls. As a result, we expect a(n):

A) increase in the supply of chicken.
B) decrease in the supply of chicken.
C) increase in the demand for chicken.
D) decrease in the demand for chicken.

Question 78

Turkey and chicken are substitutes. The price of turkey falls. As a result, we expect the:

A) price of chicken to increase.
B) quantity of chicken sold to increase.
C) price of chicken to decrease.
D) quantity of chicken sold to not change.

Question 79

Automobiles are considered a normal good. Incomes decline as the economy enters a recession. As a result, we expect a(n):

A) increase in the supply of automobiles.
B) decrease in the supply of automobiles.
C) increase in the demand for automobiles.
D) decrease in the demand for automobiles.

Question 80

Automobiles are considered a normal good. Incomes decline as the economy enters a recession. As a result, we expect the equilibrium price:

A) and quantity of automobiles to increase.
B) and quantity of automobiles to decrease.
C) to increase and quantity of automobiles to decrease.
D) to decrease and quantity of automobiles to increase.