Deck 2: Supply and Demand

Question 1

The equilibrium quantity is

A)the amount exchanged at the equilibrium price.
B)an amount higher than consumers were wanted to buy.
C)an amount lower than producers wanted to sell.
D)always less than the equilibrium price.

Answer 1

A

Question 2

Economists argue that markets serve the interests of society primarily because

A)consumers are made better off (regardless of whether producers are made better off).
B)producers are made better off (regardless of whether consumers are made better off).
C)both consumers and producers are made better off.
D)money is made available for government.

Answer 2

C

Question 3

The group of people who are willing to provide goods and services in exchange for money are called

A)profiteers.
B)benefactors.
C)consumers.
D)producers.

Answer 3

D

Question 4

The price at which the amount consumers wish to purchase equals the amount firms wish to sell is called the

A)equilibrium quantity.
B)equilibrium price.
C)optimal quantity.
D)optimal result.

Question 5

The amount that firms are willing and able to sell at a particular price during a particular period of time is the

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

Question 6

Ceteris paribus is Latin for

A)all is lost.
B)at equilibrium.
C)equilibrium is optimal.
D)holding all other things constant.

Question 7

The quantity demanded is the amount households wish to purchase

A)at all possible prices during a specified period of time.
B)at a particular price during a specified period of time.
C)at a particular price (the timeframe is irrelevant).
D)at all possible prices (the timeframe is irrelevant).

Question 8

The amount of money that must be paid per unit of output is called the

A)market.
B)equilibrium.
C)wage.
D)price.

Question 9

The underlying reason for the upward sloping nature of the supply curve is that

A)the production of most goods comes with increasing marginal benefits.
B)the production of most goods comes with increasing marginal costs.
C)the consumption of most goods comes with decreasing marginal utility.
D)the consumption of most goods comes with increasing marginal utility.

Question 10

At the equilibrium price

A)quantity demanded exceeds quantity supplied.
B)quantity demanded equals quantity supplied.
C)quantity demanded is less than quantity supplied.
D)quantity demanded is unrelated to quantity supplied.

Question 11

The Latin phrase "ceteris paribus" is used by economists to mean

A)"all other things being equal" or "all other things held constant".
B)all is lost.
C)freedom is better than regulation.
D)the only constant is change.

Question 12

The group of people who are willing to offer money in exchange for goods and services are called

A)profiteers.
B)benefactors.
C)consumers.
D)producers.

Question 13

Ebay does not qualify as a market for the good being sold because it is not a specific physical location.

A)True
B)False

Question 14

The mechanism by which buyers and sellers negotiate an exchange is called a/an

A)equilibrium.
B)model.
C)market.
D)meeting.

Question 15

The amount consumers are willing and able to buy at a particular price during a specified period of time is the

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

Question 16

Economists know that consumers and producers are both made better off than they would be without free exchange because the exchanges are

A)mandated by government.
B)voluntary.
C)able to make consumers better off by an amount that compensates producers for their losses.
D)able to make producers better off by an amount that compensates consumers for their losses.

Question 17

At the equilibrium price

A)the amount buyers wish to purchase equals the amount producers wish to sell.
B)the amount buyers wish to purchase is greater than the amount producers wish to sell.
C)the amount buyers wish to purchase is less than the amount producers wish to sell.

Question 18

A market must be in a physical location

A)True
B)False

Question 19

The supply and demand model examines the how prices and quantities are determined

A)in markets.
B)by governments.
C)by churches.
D)by monopolists.

Question 20

On the Heritage Foundation's scale of "Economic Freedom," the least "free" country would be that one who's economic system was purely

A)capitalist.
B)socialist.
C)utilitarian.
D)communist.

Question 21

In Figure 2.1, a "P" for price would go in

A)Box 1.
B)Box 2.
C)Box 4.
D)Box 6.

Question 22

From Table 2.1, and under the most likely scenario where columns A and B are assigned to represent quantity demanded and quantity supplied, which is the equilibrium price?

A)$1
B)$2
C)$3
D)$4

Question 23

The relationship between price and quantity demanded, ceteris paribus is

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

Question 24

The relationship between price and quantity supplied, ceteris paribus is

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

Question 25

From Table 2.1, which column is likely to be the one for quantity supplied?

A)column A
B)neither A nor B
C)column B
D)either A or B are equally likely

Question 26

In Figure 2.1, Box 6 would be labeled

A)P* for equilibrium price.
B)S for supply.
C)P for price.
D)Q/t for quantity per unit of time.

Question 27

In Figure 2.1, Box 1 would be labeled

A)P* for equilibrium price.
B)P for price.
C)S for supply.
D)D for demand.

Question 28

In Figure 2.1, Box 3 would be labeled

A)P* for equilibrium price.
B)P for price.
C)S for supply.
D)D for demand.

Question 29

From Table 2.1, which column is likely to be the one for quantity demanded?

A)column A
B)neither A nor B
C)column B
D)either A or B are equally likely

Question 30

When an economics students draws a supply and demand diagram to model an increase in the income, she is assuming this change happens

A)semper fidelis.
B)ceteris paribus.
C)ipso facto.
D)de facto.

Question 31

Unless circumstances are quite out of the ordinary, a demand curve will be

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

Question 32

In Figure 2.1, a "D" for Demand would go in

A)Box 2.
B)Box 4.
C)Box 5.
D)Box 6.

Question 33

In Figure 2.1, Box 2 would be labeled

A)P* for equilibrium price.
B)P for price.
C)S for supply.
D)D for demand.

Question 34

From Table 2.1, and under the most likely scenario where columns A and B are assigned to represent quantity demanded and quantity supplied, which is the equilibrium quantity?

A)1 unit
B)2 units
C)3 units
D)4 units

Question 35

If the price of a typical good rises, the quantity demanded for that good will

A)decrease.
B)increase.
C)remain the same.
D)automatically decrease to zero.

Question 36

In drawing a demand curve, the labels for the axes are

A)price (on the vertical axis)and quantity (on the horizontal axis).
B)price (on the vertical axis)and quantity per unit of time (on the horizontal axis).
C)price (on the horizontal axis)and quantity (on the vertical axis).
D)price (on the horizontal axis)and quantity per unit of time (on the vertical axis).

Question 37

In Figure 2.1, Box 4 would be labeled

A)Q* for equilibrium quantity.
B)S for supply.
C)P for price.
D)D for demand.

Question 38

In Figure 2.1, a "P*" for equilibrium price would go in

A)Box 1.
B)Box 2.
C)Box 3.
D)Box 4.

Question 39

If the price of a typical good falls, the quantity demanded for that good will

A)decrease.
B)increase.
C)remain the same.
D)automatically increase to infinity.

Question 40

In Figure 2.1, Box 5 would be labeled

A)P* for equilibrium price.
B)P for price.
C)S for supply.
D)D for demand.

Question 41

The condition where firms do not want to sell as many as consumers want to buy is called

A)a shortage.
B)a surplus.
C)an equilibrium.
D)a market collapse.

Question 42

A surplus exists when

A)QD>QS
B)QDC)QD=QS
D)an act of god makes goods available only at very high prices.

Question 43

In Figure 2.1, a "q/t" for quantity per unit time price would go in

A)Box 1.
B)Box 2.
C)Box 4.
D)Box 6.

Question 44

From Table 2.3, at the price of $1 there is a

A)shortage of 5
B)neither a shortage nor a surplus.
C)shortage of 4.
D)surplus of 4.

Question 45

Another term for shortage is

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

Question 46

From Table 2.3, at the price of $4 there is a

A)shortage of 2.
B)surplus of 2.
C)neither a shortage nor a surplus.
D)surplus of 4.

Question 47

A shortage exists when

A)QD>QS
B)QDC)QD=QS
D)an act of god makes goods available at very low prices.

Question 48

From Table 2.3, at the price of $3 there is a

A)shortage of 2
B)neither a shortage nor a surplus.
C)shortage of 4.
D)surplus of 4.

Question 49

From Table 2.2, which column is the one for shortage?

A)column A
B)neither A nor B
C)column B
D)either A or B are equally likely

Question 50

From Table 2.3, at the price of $5 there is a

A)shortage of 4.
B)surplus of 2.
C)neither a shortage nor a surplus.
D)surplus of 4.

Question 51

Another term for surplus is

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

Question 52

The condition where firms want to sell more than consumers want to buy is called

A)a shortage.
B)a surplus.
C)an equilibrium.
D)a market collapse.

Question 53

The Law of Demand indicates that

A)there is a negative relationship between quantity demanded and quantity supplied.
B)there is a negative relationship between quantity demanded and price.
C)there is a positive relationship between quantity demanded and quantity supplied.
D)there is a positive relationship between quantity demanded and price.

Question 54

If the supply and demand curves cross at a quantity of 100, then the price necessary to get firms to sell more than that will have to be _______ equilibrium.

A)above
B)at
C)below
D)within 10% either way of

Question 55

From Table 2.2, which column is the one for surplus?

A)column A
B)neither A nor B
C)column B
D)either A or B are equally likely

Question 56

The notion that the second unit of a good consumed improves the happiness of the consumer by less than the first unit improved the happiness of the consumer is summarized as

A)the substitution effect.
B)the real-balances effect.
C)diminishing marginal utility.

Question 57

From Table 2.3, at the price of $2 there is a

A)shortage of 2.
B)neither a shortage nor a surplus.
C)shortage of 4.
D)surplus of 4.

Question 58

In Figure 2.1, a "Q*" for equilibrium quantity would go in

A)Box 1.
B)Box 2.
C)Box 3.
D)Box 4.

Question 59

If the supply and demand curves cross at a price of $2, at any price above that there will be

A)an equilibrium.
B)a surplus.
C)a shortage.
D)a crisis.

Question 60

In Figure 2.1, a "S" for Supply would go in

A)Box 2.
B)Box 4.
C)Box 5.
D)Box 6.

Question 61

In drawing a supply curve, the labels for the axes are

A)price (on the vertical axis)and quantity (on the horizontal axis).
B)price (on the vertical axis)and quantity per unit of time (on the horizontal axis).
C)price (on the horizontal axis)and quantity (on the vertical axis).
D)price (on the horizontal axis)and quantity per unit of time (on the vertical axis).

Question 62

The reason that the supply curve is upward sloping is

A)diminishing marginal costs.
B)diminishing average costs.
C)increasing marginal costs.
D)increasing average costs.

Question 63

The Law of Diminishing Marginal Utility suggests that

A)when you consume more you are less happy.
B)when you consume more society is less well off.
C)the more you consume the less extra enjoyment you get out of each additional unit.
D)when prices are higher you buy more.

Question 64

If the price of a typical good rises, the quantity supplied for that good will

A)decrease.
B)increase.
C)remain the same.
D)automatically increase to infinity.

Question 65

Unless circumstances are quite out of the ordinary, a supply curve will be

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

Question 66

An increase in the income of consumers will cause the

A)supply of all goods to rise.
B)demand for all goods to rise.
C)supply of all goods to fall.
D)the demand for some goods to rise and for others to fall.

Question 67

If you heard overheard a farmer discussing his planting plans for the upcoming season and he said "The price of corn has gone way up. I know I'll have to put some money into fertilizer on the field where I was going to plant soybeans, but it will be worth it this year." This would be consistent with which justification for an upward sloping supply curve

A)increasing marginal cost.
B)the need for higher prices in one good to motivate a shift in production from another.
C)the real-balance effect.
D)diminishing marginal utility.

Question 68

The substitution effect suggests that

A)when prices are higher your buying power is less so you buy less.
B)when prices are higher you buy less of what you originally wanted and use something else instead.
C)when prices are higher buy fewer because the marginal utility of a good is diminishing.
D)when prices are higher you buy more.

Question 69

The notion that the money in your possession will buy less when the price rises is provided as the explanation for

A)the substitution effect.
B)the real-balances effect.
C)diminishing marginal utility.

Question 70

The real balances effect suggests that

A)when prices are higher your buying power is less so you buy less.
B)when prices are higher you buy less of what you originally wanted and use something else instead.
C)when prices are higher buy fewer because the marginal utility of a good is diminishing.
D)when prices are higher you buy more.

Question 71

The notion that when the price of the good you want rises you will buy less of it because you will find another good that will do instead, is provided as the explanation for

A)the substitution effect.
B)the real-balances effect.
C)diminishing marginal utility.

Question 72

If you heard overheard a farmer discussing his planting plans for the upcoming season and he said "The price of corn has gone way up. I know I'll have to put some money into fertilizer on that field on the hill that's been idle all these years, but it will be worth it this year." This would be consistent with which justification for an upward sloping supply curve

A)increasing marginal cost.
B)the need for higher prices in one good to motivate a shift in production from another.
C)the real-balance effect.
D)diminishing marginal utility.

Question 73

Which of the following will impact both supply and demand

A)a change in price.
B)a change in expected future price.
C)a change in quantity.
D)a change in income.

Question 74

A friend is telling you that they tend to drink more at parties than they do at home. You ask about why and they tell you that though they enjoy their fifth and sixth drinks the same regardless of where they are, the fact that it is free at the party and they have to pay to replace it at home, you translate that statement into a verification of

A)the substitution effect.
B)the real-balances effect.
C)the notion of diminishing marginal utility.

Question 75

If the price of a typical good falls, the quantity supplied for that good will

A)decrease.
B)increase.
C)remain the same.
D)automatically increase to zero.

Question 76

If you are given $20 and told to go to the store and buy as many potatoes as you can, the reason your demand curve for potatoes is downward sloping has mostly to do with

A)the substitution effect.
B)the real-balances effect.
C)diminishing marginal utility.

Question 77

If you are grocery shopping and you see that the price of beef has risen and as a result you change your planned menu for the week and buy chicken instead, the reason your demand curve for beef is downward sloping has mostly to do with

A)the substitution effect.
B)the real-balances effect.
C)diminishing marginal utility.

Question 78

An increase in which of the following determinants of demand will have an ambiguous (uncertain)effect on price

A)taste.
B)price of a complement.
C)income.
D)price of a substitute.

Question 79

The Law of Supply indicates that

A)there is a negative relationship between quantity demanded and quantity supplied.
B)there is a negative relationship between quantity supplied and price.
C)there is a positive relationship between quantity demanded and quantity supplied.
D)there is a positive relationship between quantity supplied and price.

Question 80

The quantity supplied is the amount firms wish to sell

A)at all possible prices during a specified period of time.
B)at a particular price during a specified period of time.
C)at a particular price (the timeframe is irrelevant).
D)at all possible prices (the timeframe is irrelevant).