Deck 4: Demand, Supply, and Market Equilibrium

Question 1

Either an increase in the number of buyers or an increase in tastes or preferences for a good or service will increase the market demand for that good or service.

Answer 1

True

Question 2

Two goods are complements if an increase in the price of one causes an increase in the demand for the other good.

Answer 2

False

Question 3

When the price of corn falls,the market supply of wheat (which can be grown using the same land)is likely to increase.

Answer 3

True

Question 4

Either technological progress or cost increasing new government regulations will increase supply.

Question 5

If input prices fall,it will lower the cost of production,causing the supply curve to shift to the right.

Question 6

Increasing government taxation or regulation of an industry generally increases the supply of goods.

Question 7

According to the law of supply,other things equal,when the price of a good or service rises,the quantity supplied increases,but supply does not.

Question 8

An increase in the price of ice cream would cause a decrease in the demand for ice cream and an increase in the demand for frozen yogurt,a substitute.

Question 9

According to the law of demand,other things equal,when the price of a good or service falls,demand increases.

Question 10

A market is not really a place but rather the process of buyers and sellers exchanging goods and services.

Question 11

A technological advance that reduces the cost of producing computers will shift the supply curve of computers to the right.

Question 12

Because personal tastes differ,what are substitutes for one person need not be substitutes for another person.

Question 13

If the price of pizza falls,the demand for pizza will rise.

Question 14

If the price of Good A increases and the demand for Good B increases as well,Goods A and B are most likely complements.

Question 15

An economist would likely consider the sale of soft drinks at a major league baseball stadium to represent the same market as the sale of soft drinks at a gas station.

Question 16

If consumers were originally willing to buy 500 units of a good at a price of $20 are now willing to buy 500 units of the same good at a price of $10,that change would be described as a decrease in demand.

Question 17

If hot dogs are inferior goods,the demand for hot dogs will rise as consumer income falls.

Question 18

Ceteris paribus,if the price of lumber increases,we would expect an increase in the supply of lumber.

Question 19

If watermelons are normal goods,the demand for them will rise as the income of consumers rises.

Question 20

When the price of steak falls,we would expect the quantity demanded of steak to rise.

Question 21

Price reductions will usually result whenever the quantity supplied exceeds the quantity demanded at the current price.

Question 22

When the price of a good or service changes

A) the supply curve shifts in the opposite direction.
B) the demand curve shifts in the opposite direction.
C) the demand curve shifts in the same direction.
D) there is a movement along a given demand curve.

Question 23

An increase in the price of a good will

A) increase demand.
B) decrease demand.
C) increase quantity demanded.
D) decrease quantity demanded.

Question 24

"Other things equal,when the price of a good rises,the quantity demanded of the good falls,and when the price falls,the quantity demanded rises." This relationship between price and quantity demanded is referred to as

A) equilibrium.
B) the law of demand.
C) the relationship between demand and income.
D) the definition of a normal good.

Question 25

Which of these statements best represents the law of demand?

A) When buyers' tastes for a good increase, they buy more of the good.
B) When the size of the consumer population rises, buyers purchase more of most goods.
C) When the price of a good decreases, buyers purchase more of the good.
D) Changes in preferences lead to changes in demand.

Question 26

Which of the following relationships reflect the law of supply?

A) Q_S => ? P
B) ¯ P => ¯ S
C) P => ? Q_S
D) ¯ P => ? Q_S

Question 27

The quantity demanded of a good is the amount that buyers are

A) willing to buy.
B) willing and able to buy.
C) willing, able, and need to buy.
D) able to buy.

Question 28

In economics,the demand for a good refers to the amount of the good people:

A) would like to have if the good were free.
B) will buy at various prices.
C) need to achieve a minimum standard of living.
D) will buy at alternative income levels.

Question 29

The law of demand refers to the:

A) decrease in price that results as more units of a product are demanded.
B) increase in price that results from an increase in demand for a good of limited supply.
C) inverse relationship between the price of a good and the quantity demanded.
D) increase in the quantity of a good made available when its price increases.

Question 30

Which of the following is not held constant along a given demand curve?

A) income
B) price
C) tastes
D) expectations

Question 31

The law of demand illustrates a(n)____ relationship between price and ____.

A) direct; quantity demanded
B) inverse; quantity demanded
C) inverse; demand
D) direct; demand

Question 32

An increase in quantity demanded

A) illustrated by a movement downward and to the right along a demand curve.
B) illustrated by a movement upward and to the left along a demand curve.
C) shifts the demand curve to the left.
D) shifts the demand curve to the right.

Question 33

A decrease in the price of a good will

A) increase demand.
B) decrease demand.
C) increase quantity demanded.
D) decrease quantity demanded.

Question 34

If the market for wheat is in equilibrium,the quantity of wheat demanded will equal the quantity of wheat supplied.

Question 35

Which of the following is true of a competitive market?

A) The rules of supply and demand do not apply to it.
B) Buyers and sellers have little market power.
C) Each buyer's or seller's effect on market price is substantial.
D) Few sellers offer similar products.

Question 36

The law of demand asserts that:

A) output prices are more important than input prices.
B) when people want a good badly enough they will find a way to pay for it.
C) people want to buy more of goods that are priced very high because of their prestige.
D) the quantity of a good that people will buy is inversely related to the product's price.

Question 37

The law of demand states that,ceteris paribus,an increase in

A) price causes quantity demanded to increase.
B) price causes quantity demanded to decrease.
C) quantity demanded causes price to increase.
D) quantity demanded causes price to decrease.

Question 38

A downward-sloping demand curve illustrates

A) that demand increases.
B) that prices fall.
C) the relationship between income and demand.
D) the law of demand.

Question 39

A decrease in quantity demanded

A) illustrated by a movement downward and to the right along a demand curve.
B) illustrated by a movement upward and to the left along a demand curve.
C) shifts the demand curve to the left.
D) shifts the demand curve to the right.

Question 40

A decrease in the price of a good would

A) increase the supply of the good.
B) increase the quantity demanded of the good.
C) give producers an incentive to produce more to keep profits from falling.
D) shift the supply curve for the good to the left.

Question 41

If consumers are less willing and able to pay for each level of output than they were previously,then apparently:

A) demand has increased.
B) supply has increased.
C) demand has decreased.
D) there has been a movement down along the demand curve.

Question 42

If the demand for milk is downward sloping,then an increase in the price of milk will result in a(n):

A) increase in the demand for milk.
B) decrease in the demand for milk.
C) increase in the quantity of milk demanded.
D) decrease in the quantity of milk demanded.

Question 43

A downward-sloping demand curve shows:

A) the direct relationship between price and quantity supplied; as price increases, the quantity supplied increases.
B) the inverse relationship between price and quantity supplied; as price increases, the quantity supplied decreases.
C) the direct relationship between price and quantity demanded; as price increases, the quantity demanded increases.
D) the inverse relationship between price and quantity demanded; as price increases, the quantity demanded decreases.

Question 44

The law of demand refers to the:

A) negative relationship between the price of a good and the willingness of producers to sell it.
B) price increase that results from an increase in demand.
C) inverse relationship between the price of a good and the quantity demanded.
D) increase in the quantity of a good made available when its price increases.

Question 45

Which of the following relationships reflect the law of demand?

A)
B)
C)
D)

Question 46

Which of the following would not cause a change in the demand for cheese?

A) an increase in the price of crackers, which are consumed with cheese
B) an increase in the income of cheese consumers
C) an increase in the population of cheese lovers
D) an increase in the price of cheese

Question 47

AWhen quantity demanded decreases in response to a change in price:

A) the demand curve shifts to the right.
B) the demand curve shifts to the left.
C) there is a movement down along the demand curve.
D) there is a movement up along the demand curve.

Question 48

Which of the following explains why the quantity of a good demanded decreases when its price increases?

A) Consumer preferences change when the price of a good changes.
B) The nominal income of consumers falls when the price of a good increases.
C) Substitutes become relatively cheaper when the price of a good increases.
D) Complements become relatively cheaper when the price of a good increases.

Question 49

Which of the following is true of a demand curve?

A) It must remain stable over time.
B) It can shift either rightward or leftward.
C) It is possible to move along the curve, but the demand curve will not shift.
D) None of the above are true.

Question 50

The demand schedule for a good:

A) indicates the quantity that people will buy at the prevailing price.
B) indicates the quantities that suppliers will sell at various market prices.
C) indicates the quantities that will be purchased at alternative market prices.
D) is determined primarily by the cost of producing the good.

Question 51

Assume the demand schedule for cookies is downward sloping.If the price of cookies falls from $2.50 to $2.25 per dozen:

A) the demand for cookies will fall.
B) the demand for cookies will rise.
C) a larger quantity of cookies will be demanded.
D) a smaller quantity of cookies will be demanded.

Question 52

Exhibit 4-1 Refer to Exhibit 4-1.At $4 the quantity demanded in the market would be:

A) 12.
B) 22.
C) 31.
D) 39.

Question 53

Exhibit 4-1 Refer to Exhibit 4-1.Shown are the demand schedules for gourmet ice cream of two individuals and the rest of the market.At a price of $8,the quantity demanded in the market would be:

A) 12.
B) 22.
C) 31.
D) 39.

Question 54

To find the market demand curve for a product,we sum the individual demand curves

A) vertically.
B) diagonally.
C) horizontally.
D) perpendicularly.

Question 55

When quantity demanded decreases at every possible price,the demand curve

A) shifts to the left.
B) shifts to the right.
C) there is a movement along the given demand curve.
D) none of the above.

Question 56

When quantity demanded increases at every possible price,the demand curve

A) shifts to the left.
B) shifts to the right.
C) there is a movement along the given demand curve.
D) none of the above.

Question 57

A change in which of the following variables does not cause a change in demand?

A) prices of unrelated goods
B) incomes of demanders
C) the number of demanders
D) tastes of demanders

Question 58

If the price of music downloads decreases,which of the following is most likely to occur?

A) Quantity demanded will decrease.
B) Quantity demanded will increase.
C) Demand will increase.
D) Demand will decrease.

Question 59

The quantity of a good demanded tends to increase as its price falls because:

A) a decrease in price shifts the demand curve to the right.
B) a decrease in price shifts the demand curve to the left.
C) a decrease in price shifts the supply curve to the right.
D) a decrease in price leads consumers to substitute toward this now relatively cheaper product.

Question 60

When a demand schedule is drawn in a graph:

A) price is measured on the vertical axis.
B) quantity is measured on the horizontal axis.
C) other variables are held constant.
D) all of the above are correct.

Question 61

Which of the following events would cause an upward movement along the demand curve for olives?

A) The number of people who purchase olives decreases.
B) Consumer income decreases, and olives are a normal good.
C) The price of pickles decreases, and pickles are a substitute for olives.
D) The price of olives rises.

Question 62

If there is a decrease in demand

A) firms would be willing to supply less of the good than before at each possible price.
B) buyers are willing to purchase less of the good than before at each possible price.
C) buyer's taste for the good has increased.
D) the price of the product has increased, causing consumers to buy less of the product.

Question 63

According to the income effect,an increase in the price of oranges will:

A) cause consumers to consume more apples because of greater savings on that good.
B) cause consumers to spend more on oranges because a higher price signals that oranges are better than apples.
C) cause consumers to replace some oranges with other fruit that is now relatively cheaper than oranges.
D) leave consumers with less real income to spend on all goods.

Question 64

Pizza is a normal good if the demand

A) for pizza rises when income rises.
B) for pizza rises when the price of pizza falls.
C) curve for pizza slopes upward.
D) curve for pizza shifts to the right when the price of burritos rises, assuming pizza and burritos are substitutes.

Question 65

Which of the following events would cause an upward movement along the demand curve for olives?

A) The number of people who purchase olives decreases.
B) Consumer income decreases, and olives are a normal good.
C) The price of pickles decreases, and pickles are a substitute for olives.
D) The price of olives rises.

Question 66

Each of the following is a determinant of demand except

A) tastes.
B) production technology.
C) expectations.
D) the prices of related goods.

Question 67

Which of the following would cause an increase in the demand curve for oranges?

A) a freeze in Florida (a major orange producing state)
B) a new machine that allows orange growers to harvest oranges faster
C) a decrease in the price of apples
D) an announcement by the FDA that oranges lowers cholesterol

Question 68

Based on widespread reaction to the threat of the H1N1 virus,the likely effect on the demand curve for hand sanitizers would be

A) a shift of the demand curve to the right.
B) a movement downward along the demand curve to the right.
C) a shift of the demand curve to the left.
D) a movement upward along the demand curve to the left.

Question 69

Which of the following changes would not shift the demand curve for a good or service?

A) a change in income
B) a change in the price of the good or service
C) a change in expectations about the future price of the good or service
D) a change in the price of a related good or service

Question 70

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

A) a decrease in the price of gasoline
B) an increase in consumer income, assuming gasoline is a normal good
C) an increase in the price of cars, a complement for gasoline
D) a decrease in the expected future price of gasoline

Question 71

A decrease in demand could be caused by

A) an increase in price.
B) a decrease in the price of a complement.
C) a technological advance.
D) a decrease in the price of a substitute.

Question 72

You lose your job and,as a result,you buy fewer iTunes music downloads.This shows that you consider iTunes music downloads to be a(n)

A) luxury good.
B) inferior good.
C) normal good.
D) complementary good.

Question 73

Which of the following would cause an increase in demand for golf balls?

A) a decrease in the price of golf balls
B) an increase in the price of green fees
C) an expectation by buyers that their incomes will increase in the very near future
D) a change in consumer tastes away from golf and toward tennis

Question 74

A movement along the demand curve might be caused by a change in

A) income.
B) the prices of substitutes or complements.
C) expectations about future prices.
D) the price of the good or service that is being demanded.

Question 75

Economists normally

A) do not try to explain people's tastes, but they do try to explain what happens when tastes change.
B) believe that they must be able to explain people's tastes in order to explain what happens when tastes change.
C) do not believe that people's tastes determine demand, so they ignore the subject of tastes.
D) incorporate tastes into economic models only to the extent that tastes determine whether pairs of goods are substitutes or complements.

Question 76

A demand curve shows the relationship between price and quantity demanded,"other things remaining constant." The other things that remain constant include all of the following except the:

A) price of the product.
B) price of complementary products.
C) price of substitute products.
D) number of consumers in the demographic group purchasing the product.

Question 77

An increase in demand could be caused by

A) a decrease in price.
B) a decrease in income, assuming the good is inferior.
C) buyers expecting the price of the good to fall in the near future.
D) an increase in the price of a complement.

Question 78

Which of the following would not cause an increase in the demand for cheese?

A) a decrease in the price of crackers, which are consumed with cheese
B) an increase in the income of cheese consumers, assuming that cheese is a normal good
C) an increase in the population
D) a technological advance that makes it cheaper to produce cheese

Question 79

All of the following would shift a product's demand curve except a(n):

A) increase in the price of the product.
B) decrease in consumer income.
C) increase in the price of a substitute.
D) increase in the price of a complement.

Question 80

Which of the following would cause the demand curve for DVDs to shift to the right?

A) a decrease in the price of DVDs
B) a decrease in the price of DVD players
C) a change in the tastes towards watching movies in movie theaters
D) a decrease in the number of people in the market for DVDs