Deck 4: The Market Forces of Supply and Demand

Question 1

If a market exists anywhere, it will be perfectly competitive.

Answer 1

False

Question 2

In Australia, a mobile telephone company might be a monopolist.

Answer 2

False

Question 3

A competitive market is a market in which there are enough buyers and sellers that each has a negligible impact on the market price.

Answer 3

True

Question 4

The wheat market is a good example of perfect competition.

Question 5

Tastes and expectations are not determinants of individual demand.

Question 6

Demand curves are often upward sloping when prices are very high.

Question 7

Supply and demand determine prices and prices allocate the economy's scarce resources.

Question 8

A market with just one seller is said to be a monopoly.

Question 9

The stock market is a monopoly.

Question 10

Supply and demand are the concepts that economists use most often.

Question 11

If a good or service has only more than one seller, it is called a monopoly.

Question 12

A market with many sellers offering slightly different products is called a monopoly.

Question 13

The law of demand states that, other things being equal, when the price of a good rises, the quantity demanded of the good falls.

Question 14

A market is a group of buyers and sellers of a particular product.

Question 15

The quantity demanded of a product is the amount that buyers are willing and able to purchase at a particular price.

Question 16

If tea and coffee are substitutes, a rise in the price of tea will cause a rise in the demand for coffee.

Question 17

If the demand for movies falls when income falls, then movies must be an inferior good.

Question 18

The quantity demanded of a product is positively related to the price.

Question 19

In a perfectly competitive market, sellers are price setters while buyers are price takers.

Question 20

The computer software industry is an example of a perfectly competitive industry.

Question 21

A movement along a demand curve is called a change in quantity demanded and a shift of a demand curve is called a change in demand.

Question 22

If the price of tea increases, there is likely to be a rightward shift in the demand for coffee.

Question 23

If mad cow disease causes a beef-scare in Europe, demand for wild meat like deer or kangaroo is likely to shift to the right in that market.

Question 24

Increasing the number of sellers in a market is demonstrated by a movement along the supply curve.

Question 25

When an increase in the price of one good raises the demand for another good, the two goods are called complements.

Question 26

The quantity supplied of a good or service is the amount that sellers are willing and able to sell at a particular price.

Question 27

Individual demand curves are summed horizontally to obtain the market demand curve.

Question 28

The Latin phrase ceteris paribus means 'other things changing'.

Question 29

The law of supply states that, other things being equal, when the price of a good rises, the quantity supplied of the good falls.

Question 30

A game console and games designed for that console are substitute goods.

Question 31

If the price of a good changes, its demand curve shifts.

Question 32

If the price of DVD players falls, there is likely to be a leftward shift in the demand for DVD movie rentals.

Question 33

A reduction in the price of a product and an increase in the number of buyers in the market affect the demand curve in the same general way.

Question 34

If crocodile leather handbags are a normal good, then consumers will buy less of them as their incomes rise.

Question 35

The market demand is the average of all of the individual demands for a particular good or service.

Question 36

Cricket bats and cricket balls are substitute goods.

Question 37

An increase in income will cause a rightward shift in the demand curve if the good is a normal good.

Question 38

The supply curve has a negative slope.

Question 39

In addition to price, the determinants of individual supply include input prices, technology and expectations.

Question 40

If a forestry company expects timber prices to be higher next year rather than this year, they will supply more to the market this year.

Question 41

The price of any good adjusts until quantity demanded equals quantity supplied.

Question 42

If demand increases and supply simultaneously decreases, equilibrium price will rise.

Question 43

The market-clearing price will always be lower than the equilibrium price.

Question 44

The analysis of a change in the equilibrium in a market is called comparative statics.

Question 45

Analysing how an event affects a market can be accomplished in two steps.

Question 46

A supply curve slopes upward because, ceteris paribus, a higher price means a greater quantity supplied.

Question 47

A shortage will occur at any price below equilibrium price and a surplus will occur at any price above equilibrium price.

Question 48

If the market price is below the equilibrium price, there will be a surplus and the price will rise.

Question 49

It is not possible for demand and supply to shift at the same time.

Question 50

A table showing how the quantity supplied of a product varies with its price, other things being equal, is a supply schedule and the graph of the supply schedule is called a supply curve.

Question 51

A change in the cost of producing a good will cause the supply curve of the good to shift.

Question 52

A market supply curve is found by summing vertically all of the individual supply curves.

Question 53

Improvements in technology is demonstrated by a shift in the supply curve.

Question 54

Government interventions are frequently needed to drive a market towards an equilibrium.

Question 55

Surpluses drive price up, whereas shortages drive price down.

Question 56

At the equilibrium price, quantity demanded is equal to quantity supplied.

Question 57

When large areas of the US Pacific North-West were protected from logging in 1990 (to conserve spotted owl habitat), this is likely to have caused the equilibrium price of logs to increase and the equilibrium quantity of logs sold to decrease.

Question 58

Equilibrium in a market is found where the supply curve and the demand curve intersect.

Question 59

If the number of buyers of DVD movies increases, other things being equal, there will be an increase in the equilibrium price of DVD movies and a decrease in the equilibrium quantity sold.

Question 60

If the market price is below the equilibrium price, there will be a surplus and the price will rise.

Question 61

Generally, the market for ice-cream would be considered:

A) a monopolistic market
B) more organised than an auction
C) a competitive market
D) a market where individual sellers have significant pricing power

Question 62

There are thousands of wheat farmers who produce and sell wheat, and there are millions of consumers who use wheat and wheat products. The market for wheat would be considered:

A) perfectly competitive
B) monopolistic
C) oligopolistic
D) monopolistically competitive

Question 63

The behaviour of firms to different market conditions is known as:

A) supply
B) demand
C) incomes
D) taxation

Question 64

A market is a:

A) place where only buyers come together
B) place where only sellers meet
C) group of demanders and suppliers of a particular good or service
D) group of people with common desires

Question 65

If there is an improvement in the technology of producing a product, the supply curve for that product will shift to the left.

Question 66

In a market economy, prices determine who produces each good and how much is produced.

Question 67

A perfectly competitive market has which of the following characteristics?

A) many buyers
B) many sellers
C) the goods sold are all the same
D) all of the above are correct

Question 68

A movement along a supply curve is called a change in supply, while a shift of the curve is called a change in quantity supplied.

Question 69

Based on economic theory, anyone willing to pay the market price for a resource may have it.

Question 70

The internet has enabled markets to move towards the competitive model.

Question 71

Because consumers can now buy books online and get them shipped, this leads to less competition.

Question 72

If a seller in a competitive market chooses to charge more than the market price, then:

A) buyers will tend to make their purchases elsewhere
B) the owners of the raw materials used in production would raise the prices for the raw materials
C) other sellers would also raise their price
D) buyers would tend to buy more from this seller

Question 73

The rationing function of prices refers to the fact that government must distribute any surplus goods that may be left in a competitive market.

Question 74

If sellers are price makers, then individually:

A) their production decisions can affect the market price
B) their production decisions do not determine the market price
C) their production decisions have no effect on the market price
D) people will not buy their product whatever price they set

Question 75

The ultimate source of demand for a product is?

A) advertisers
B) those people who purchase the product
C) those firms that produce the product
D) the value of the labour used to produce the product

Question 76

A reduction in an input price will cause a change in quantity supplied, but not a change in supply.

Question 77

In a free market, the price at which a product is sold is determined by:

A) only producers and sellers
B) government agencies
C) sellers
D) both suppliers and demanders

Question 78

Which of the following are the words most commonly used by economists?

A) supply and demand
B) entrepreneurial ability
C) scarcity and human wants
D) prices and exchange

Question 79

Firms that sell their products in a competitive market have limited pricing power because:

A) sellers have reason to charge more than their competitors
B) each buyer has a significant influence on the price of the product
C) other sellers are offering very similar products
D) none of the above are correct

Question 80

A market where there is only one seller is called a:

A) monopoly market
B) competitive market
C) regulated market
D) wheat market