Deck 3: Supply and Demand

Question 1

The equation for the demand curve for bags of Doritos is P = 6 + (-1) × Q. Which graph shows the CORRECT demand curve?

A)

B)

C)

Answer 1

B

Question 2

(Table) The table shows the demand schedules for three individuals. Which table would be the CORRECT market demand schedule?
$\begin{array}{|r|r|r|r|}\hline \text { Price } & \text { Person 1 } & \text { Person 2 } & \text { Person 3 } \\\hline \mathbf{\$ 0 . 0 0} & 9 & 15 & 10 \\\hline \mathbf{\$ 1 0 . 0 0} & 6 & 11 & 8 \\\hline \mathbf{\$ 2 0 . 0 0} & 5 & 10 & 6 \\\hline \mathbf{\$ 3 0 . 0 0} & 3 & 9 & 4 \\\hline \mathbf{\$ 4 0 . 0 0} & 0 & 6 & 2 \\\hline \mathbf{\$ 5 0 . 0 0} & 0 & 4 & 0 \\\hline \mathbf{\$ 6 0 . 0 0} & 0 & 2 & 0 \\\hline\end{array}$

A)
$\begin{array}{|r|r|}\hline \text { Price } & \text { Quantity } \\\hline \$ 0.00 & 15 \\\hline \$ 10.00 & 11 \\\hline \$ 20.00 & 10 \\\hline \$ 30.00 & 9 \\\hline \$ 40.00 & 6 \\\hline \$ 50.00 & 4 \\\hline \$ 60.00 & 2 \\\hline\end{array}$
B)
$\begin{array}{|r|r|}\hline \text { Price } & \text { Quantity } \\\hline \$ 0.00 & 9 \\\hline \$ 10.00 & 6 \\\hline \$ 20.00 & 5 \\\hline \$ 30.00 & 3 \\\hline \$ 40.00 & 0 \\\hline \$ 50.00 & 0 \\\hline \$ 60.00 & 0 \\\hline\end{array}$
C)
$\begin{array}{|r|r|}\hline \text { Price } & \text { Quantity } \\\hline \$ 0.00 & 34 \\\hline \$ 10.00 & 25 \\\hline \$ 20.00 & 21 \\\hline \$ 30.00 & 16 \\\hline \$ 40.00 & 8 \\\hline \$ 50.00 & 4 \\\hline \$ 60.00 & 2 \\\hline\end{array}$
D)
$\begin{array}{|r|r|}\hline \text { Price } & \text { Quantity } \\\hline \$ 0.00 & 10 \\\hline \$ 10.00 & 8 \\\hline \$ 20.00 & 6 \\\hline \$ 30.00 & 4 \\\hline \$ 40.00 & 2 \\\hline \$ 50.00 & 0 \\\hline \$ 60.00 & 0 \\\hline\end{array}$

Answer 2

$\begin{array}{|r|r|}\hline \text { Price } & \text { Quantity } \\\hline \$ 0.00 & 34 \\\hline \$ 10.00 & 25 \\\hline \$ 20.00 & 21 \\\hline \$ 30.00 & 16 \\\hline \$ 40.00 & 8 \\\hline \$ 50.00 & 4 \\\hline \$ 60.00 & 2 \\\hline\end{array}$

Question 3

Which graph concerning electric vehicles indicates an increase in the quantity demanded of electric vehicles?

A)

B)

C)

D)

Answer 3

C

Question 4

Which graph shows an increase in quantity supplied?

A)

B)

C)

D)

Question 5

(Figure: Interpreting Market Equilibrium) If the price is $20, then there is a _____ units and the price will _____.

A) shortage of 4,000; fall
B) shortage of 2,000; rise
C) surplus of 4,000; fall
D) surplus of 2,000; fall

Question 6

(Figure: Interpreting Market Equilibrium) If the price is $10, then there is a _____ units and the price will _____.

A) shortage of 4,000; fall
B) shortage of 2,000; rise
C) surplus of 4,000; fall
D) surplus of 2,000; fall

Question 7

Suppose

Question 8

Is the unauthorized sale of restricted narcotics still considered market activity?

A) Yes, because it involves the exchange of money between buyers and sellers for a product.
B) Yes, because the exchange of goods usually takes place in actual places of business.
C) No, because the government considers such activity illegal.
D) No, because the prices of such narcotics are controlled by cartels.

Question 9

Which market is most likely to sell a virtual good?

A) Walgreen's Pharmacy
B) Amazon
C) online ticket exchange (e.g., StubHub)
D) online gaming marketplace

Question 10

Which is not a typical way in which markets differ from one another?

A) geographic location of markets
B) types of goods for sale in a market
C) days of the week when markets are active
D) transaction component between buyers and sellers

Question 11

Which is not a purpose that prices play in a market?

A) Prices communicate information about consumer preferences.
B) Prices give buyers a means of comparing goods that are substitutes.
C) Prices rarely change, which allows markets to be more stable.
D) Prices can help sellers determine what goods to sell.

Question 12

Which set of phrases is best associated with each other?

A) trading economy : transaction system
B) market economy : price system
C) barter economy : market system
D) price economy : demand system

Question 13

Suppose at a price of $3, Kerri is willing and able to buy three churros, Tömas is willing and able to buy five churros, and Pristine is willing and able to buy two churros. Assuming these are the only consumers in the market, the quantity demanded at $3 is _____; if the price falls to $2, the quantity demanded is likely to _____.

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

Question 14

When the price of gasoline increases, the amount of money available to spend on everything else (including gasoline) falls. This effect is known as the _____ effect.

A) income
B) marginal
C) opportunity
D) substitution

Question 15

Which factors would not shift the demand curve for ice cream?

A) a new published study that finds eating ice cream improves health and happiness
B) an increase in the price of milk, a key ingredient in ice cream
C) a reduction in the price of chocolate sauce, cherries, and other popular toppings
D) an unusually cold and rainy summer in popular beach towns

Question 16

Yoko recently graduated from college and is enjoying more income from working. She finds herself buying more art supplies from Mimi's Art Boutique and fewer art supplies from the local Walmart. What can we conclude from Yoko's buying habits?

A) Art supplies from both Mimi's and Walmart are normal goods.
B) Art supplies from both Mimi's and Walmart are inferior goods.
C) Art supplies from Mimi's are inferior goods, and those from Walmart are normal goods.
D) Art supplies from Mimi's are normal goods, and those from Walmart are inferior goods.

Question 17

Which situation would result in a change in the quantity demanded (as opposed to a change in demand) for beanbag chairs?

A) a decrease in the price of beanbag chairs
B) an increase in popularity of beanbag chairs
C) an increase in the number of potential buyers of beanbag chairs
D) a decrease in the price of video game consoles, a complement to beanbag chairs

Question 18

Which factor would shift the supply curve of music turntables to the left?

A) an increase in the popularity of vinyl records
B) an increase in the price of key components to manufacturer turntables
C) a reduction in taxes on companies making any type of music player
D) an increase in the number of companies manufacturing turntables

Question 19

Which scenario would NOT result in a shift in the supply curve for miniature golf rounds?

A) an increase in labor wages paid to the staff that operate the miniature golf course
B) an expectation of a future surge in popularity of miniature golf
C) a decrease in the price of go-kart racing, a substitute for miniature golf
D) a new subsidy given to all operators of outdoor activities

Question 20

Technological improvements in the production of plug-in electric car batteries will lead to which shift?

A) graph A
B) graph B
C) graph C
D) graph D

Question 21

If the price of sparkling water decreases, which situation would occur in the market for sparkling water, all else equal?

A) an increase in the quantity supplied
B) a decrease in the quantity supplied
C) an increase in supply
D) a decrease in supply

Question 22

Suppose the following figure represents the market for tomatoes, and the current price is $2. At this price, a shortage of _____ tomatoes would result, and in a free market, prices would _____ until equilibrium is achieved.

A) 40; increase
B) 40; decrease
C) 50; increase
D) 50; decrease

Question 23

Which graph represents a situation in which the equilibrium price has increased but the equilibrium quantity has fallen?

A) graph A
B) graph B
C) graph C
D) graph D

Question 24

If the equilibrium price of lychee fruit has fallen while the equilibrium quantity has risen, which factor may have caused it?

A) a severe drought that caused many sellers to leave the market
B) an increase in the price of rambutan fruit, a substitute for lychee fruit
C) a reduction in the price of related commodities using the same type of land for production
D) a rise in popularity in the consumption of lychee fruit

Question 25

The popularity of indoor hammocks has increased as people seek unique ways to relax. At the same time, the cost of producing indoor hammocks has fallen. Based on this information, what is the change in the equilibrium price and quantity of indoor hammocks?

A) Equilibrium price and quantity both increase.
B) Equilibrium price rises but quantity is indeterminate.
C) Equilibrium price decreases but quantity increases.
D) Equilibrium price is indeterminate but equilibrium quantity increases.

Question 26

In the market for running shoes, suppose the cost of rubber used in their production rises, while at the same time the popularity of running as a sport increases. If the latter effect is stronger in magnitude, what is the change in equilibrium price and quantity?

A) Equilibrium price and quantity both rise.
B) Equilibrium price rises and equilibrium quantity is indeterminate.
C) Equilibrium price rises but equilibrium quantity falls.
D) Equilibrium price falls and equilibrium quantity is indeterminate.