Deck 4: Demand, supply, and Market Equilibrium

Question 1

Figure 4.1
Refer to Figure 4.1 that shows Mary and Tom's individual demand curves for meals per week at Fratelli's Italian Restaurant.Assuming Mary and Tom are the only consumers in the market,what is the market quantity demanded at a price of $15?

A)1
B)2
C)3
D)9

Answer 1

C

Question 2

Figure 4.1
Refer to Figure 4.1 that shows Mary and Tom's individual demand curves for meals per week at Fratelli's Italian Restaurant.Assuming Mary and Tom are the only consumers in the market,what is the market quantity demanded at a price of $10?

A)2
B)4
C)6
D)8

Answer 2

C

Question 3

When a demand curve is drawn,which of the following is NOT held constant?

A)people's income
B)people's preferences
C)prices of related goods
D)the price of the good

Answer 3

D

Question 4

The market demand curve is:

A)negatively sloped.
B)upward sloping.
C)always vertical
D)always horizontal.

Question 5

The market demand curve:

A)shows the relationship between the price of a good and the quantity that all consumers together are willing to buy.
B)is drawn assuming that variables such as income and tastes are fixed.
C)is drawn assuming that the number of consumers is fixed.
D)all of the above

Question 6

Quantity demanded is defined as the:

A)quantity of a product that consumers are willing and able to buy at a given price.
B)quantity of a product that sellers are willing and able to buy at a given level of income.
C)quantity of a product that consumers and producers are willing and able to buy,given their level of preference.
D)quantity of a product that consumers are willing and able to sell at a given price.

Question 7

When a demand curve is drawn,which of the following is held constant?

A)people's income
B)people's preferences
C)prices of related goods
D)All of the above are held constant when constructing a demand curve.

Question 8

A change in the quantity demanded of a product is the result of a change in:

A)the price of the product.
B)the price of related goods.
C)consumer income.
D)the cost of producing the product.

Question 9

The market demand curve is:

A)downward sloping and is flatter than an individual's demand curve.
B)upward sloping and is flatter than an individual's demand curve.
C)downward sloping and is steeper than an individual's demand curve.
D)upward sloping and is steeper than an individual's demand curve.

Question 10

When there is a change in the quantity demanded it means that the:

A)hours the customer can buy products each day have increased.
B)number of products in inventory have increased.
C)quantity a consumer is willing to buy changes when the price changes.
D)selling price of the products has not changed.

Question 11

The quantity of a product that consumers are willing and able to buy at a given price is called the:

A)quantity demanded.
B)quantity supplied.
C)demand for a good.
D)demand schedule.

Question 12

Suppose that there are only three consumers of a product.At a price of $3 per unit,the first consumer would buy 6 units of the product,the second consumer would buy 5 units,and the third consumer would buy 7 units of the product.If you drew a market demand curve for this product,the quantity demanded at a price of $3 would be:

A)18 units.
B)11 units.
C)13 units.
D)unable to be determined based on the information provided.

Question 13

A demand curve is defined as the relationship between:

A)the price of a good and the quantity of that good that consumers are willing to buy.
B)the price of a good and the quantity of that good that producers are willing to sell.
C)the income of consumers and the quantity of a good that consumers are willing to buy.
D)the income of consumers and the quantity of a good that producers are willing to sell.

Question 14

In considering the relationships between price and quantity demanded,ceteris paribus means economists assume that:

A)price increases affect quantity.
B)quantity increases affect prices.
C)either price or quantity can affect demand.
D)all other variables remain unchanged.

Question 15

The law of demand states that the quantity demanded of a product increases as:

A)consumer income rises.
B)the prices of other products fall.
C)the price of the product rises.
D)the price of the product falls.

Question 16

The law of demand can be defined as:

A)a lot of people wanting the same thing.
B)the higher the price,the smaller the quantity demanded,ceteris paribus.
C)people are willing to make limited sacrifices to acquire products.
D)none of the above.

Question 17

A change in the quantity demanded of a product cannot be the result of a change in:

A)the buyer's preference.
B)the price of related goods.
C)consumer income.
D)All of the above are correct.

Question 18

Typically,a demand curve will represent what relationship?

A)the current desire for purchases of fad products as opposed to other products
B)how much the products costs and the quantity of it produced
C)how many people are willing to buy and the quantities each will purchase
D)the price and the quantity demanded by the buyers

Question 19

If a competitive market operates perfectly,it relies on:

A)the number of people buying goods.
B)the laws of supply and demand.
C)how many products can be produced for sale.
D)how much people are willing to pay for the products.

Question 20

A perfectly competitive market is a market that has:

A)many buyers.
B)many sellers.
C)no single buyer or seller who can affect the price.
D)All of the above are correct.

Question 21

In the application,what was the reason why the government decreased the tax rates of cigarettes?

A)to discourage smuggling of cigarettes from the United States
B)to encourage smoking
C)to discourage smoking
D)to give in to consumer demands of lower taxes in the country.

Question 22

The model of supply and demand is the most important tool of economic analysis.

Question 23

What is the difference between an "individual demand curve" and a "market demand curve"?

Question 24

Suppose that the price of apples decreases and the quantity of apples in the market decreases.Suggest two reasons why this might have happened.

Question 25

Figure 4.1
Refer to Figure 4.1 that shows Mary and Tom's individual demand curves for meals per week at Fratelli's Italian Restaurant.Assuming Mary and Tom are the only consumers in the market,if the market quantity demanded is 3 the price must be:

A)$5.
B)$10.
C)$15.
D)$20.

Question 26

If the law of supply holds,then the supply curve can never:

A)slope downwards.
B)be concave.
C)shift to the right.
D)shift to the left.

Question 27

In the application,what was/were the reason(s)why a lower price of cigarettes will increase the quantity demanded for cigarettes?

A)lower prices make current smokers smoke more cigarettes.
B)lower prices encourage people to start smoking.
C)lower prices encourage people to quit smoking.
D)A and B are both correct.

Question 28

What is a "change in quantity demanded"? How is a "change in quantity demanded" illustrated in a demand diagram?

Question 29

Figure 4.1
Refer to Figure 4.1 that shows Mary and Tom's individual demand curves for meals per week at Fratelli's Italian Restaurant.Assuming Mary and Tom are the only consumers in the market,if the market quantity demanded is 9 the price must be:

A)$5.
B)$10.
C)$15.
D)$20.

Question 30

The law of supply states that:

A)firms supply more of a product as consumer income rises.
B)firms supply more of a product as consumer income falls.
C)firms supply more of a product as the price of the product rises.
D)firms supply more of a product as the price of the product falls.

Question 31

What is the "law of demand"?

Question 32

In the application,when the government lowered the price of cigarettes by lowering the tax rates,the response of the consumer was:

A)an increase in quantity demanded.
B)an increase in demand.
C)a decrease in demand.
D)a decrease in quantity demanded.

Question 33

A table that shows the price of a product and the quantity of that product that a seller is willing to sell is called the:

A)supply schedule.
B)supply curve.
C)demand schedule.
D)demand curve.

Question 34

As the price of a product rises,the demand for the product falls.

Question 35

A supply curve is defined as the relationship between:

A)the price of a good and the quantity that consumers are willing to buy.
B)the price of a good and the quantity that producers are willing to sell.
C)the income of consumers and the quantity of a product that consumers are willing to buy.
D)the income of consumers and the quantity of a product that producers are willing to sell.

Question 36

On the "demand side" of a market,consumers indicate to producers what they are willing to buy,in what quantity,and at what price.

Question 37

Between an "individual demand curve" and a "market demand curve," which one has a steeper slope?

Question 38

Figure 4.1
Refer to Figure 4.1 that shows Mary and Tom's individual demand curves for meals per week at Fratelli's Italian Restaurant.Assuming Mary and Tom are the only consumers in the market,if the market quantity demanded is 6,the price must be:

A)$5.
B)$10.
C)$15.
D)$20.

Question 39

The market demand curve shows the relationship between the price and the quantity demanded by all consumers,everything else being equal.

Question 40

The substitution effect of a price change implies that as the price of a good falls,people are likely to buy less of the good whose price has fallen.

Question 41

When a supply curve is drawn,which of the following is held constant?

A)the amount of taxes or subsidies that a firm pays or receives
B)the number of sellers in a market
C)prices of inputs
D)All of the above are held constant when constructing a supply curve.

Question 42

Suppose that the price for fully electric vehicle made by Toyota increases.The quantity of fully electric cars sold in the market will:

A)increase,because Toyota would be willing to sell more fully electric vehicles.
B)decrease,because Toyota believes that to maintain the higher prices,it must sell a smaller quantity.
C)increase,because other auto manufacturers would want to enter the market and also sell fully electric vehicles.
D)Both A and C are correct.

Question 43

Why is the market supply curve positively sloped?

A)At a higher price,more firms enter the market willing to sell the product or service.
B)At a higher price,fewer firms enter the market willing to sell the product or service.
C)At a higher price,the firms already in the market and are willing to sell a larger quantity of the product or service.
D)Both A and C are correct.

Question 44

The market supply curve is:

A)downward sloping and is flatter than an individual's supply curve.
B)upward sloping and is flatter than an individual's supply curve.
C)downward sloping and is steeper than an individual's supply curve.
D)upward sloping and is steeper than an individual's supply curve.

Question 45

The market supply curve for a particular good:

A)shows the relationship between the price of the good and the quantity that all producers together are willing to sell.
B)is drawn assuming that the other variables besides product price that affect supply are fixed.
C)is drawn assuming that the number of producers is fixed.
D)all of the above

Question 46

If at a price of $1000,8 different laptop manufacturers are willing to sell 20 laptops each.If the 8 manufacturers are the only sellers of laptops in the market,then at a price of $1000,there are ________ laptops supplied in the market.

A)160
B)8
C)20
D)820

Question 47

According to the Application,which of the following is the most likely reason for the falling prices of wool worldwide?

A)lower demand for wool
B)the law of supply
C)higher demand for wool
D)lower quantity supplied of wool

Question 48

According to the Application,which of the following is the result of the falling prices of wool worldwide?

A)lower demand for wool.
B)higher demand for synthetic fibers.
C)higher demand for wool.
D)lower quantity supplied of wool.

Question 49

If a computer company will sell a laptop only if the price is $400 or higher,then $400 is known as:

A)the minimum supply price.
B)the input cost price.
C)the minimum production cost.
D)the minimum average cost.

Question 50

A minimum supply price is defined as:

A)the lowest price at which a product is made available for sale.
B)the lowest price at which a product is bought.
C)the lowest cost to produce a good.
D)the lowest price at which other sellers also want to sell the good.

Question 51

The market supply curve is:

A)negatively sloped.
B)upward sloping.
C)always vertical.
D)always horizontal.

Question 52

At a price of $1000,Dell Computer Co.is willing to sell 20 laptops and Compaq is willing to sell 40 laptops.IBM will only sell laptops if the price is $1300 or higher.At $1000,the market supply for laptops is:

A)60.
B)800.
C)20.
D)40.

Question 53

If we observe that the price is rising in the sugar market,it could be due to:

A)an excess supply of sugar.
B)an excess demand for sugar.
C)an increase in the supply of sugar.
D)a decrease in the demand for sugar.

Question 54

According to the Application,why might introducing sheep shearing not be an effective policy to raise wool prices?

A)Increased sheep shearing might decrease the demand for wool.
B)Increased sheep searing might increase the demand for wool substitutes.
C)Increased sheep shearing will definitely increase the demand for wool,causing the prices to drop.
D)Increased sheep shearing will definitely increase the supply of wool,causing the prices to drop.

Question 55

At a price of $1000,Dell Computer Co.is willing to sell 20 laptops and Compaq is willing to sell 40 laptops.IBM will only sell laptops if the price is $1300 or higher.From the point of view of IBM,$1300 is the:

A)minimum supply price.
B)minimum cost.
C)the equilibrium price.
D)minimum loss price.

Question 56

As the price of a product rises,the quantity supplied increases.

Question 57

Suppose that the quantity supplied of pizza exceeds the quantity demanded for pizza.We would expect that:

A)the price of pizza will increase.
B)the price of pizza will decrease.
C)the supply will decrease to meet the demand.
D)the demand will increase to meet the supply.

Question 58

According to the Application,the policies proposed to help raise the price of wool focuses on:

A)lowering the demand for wool.
B)raising the supply for synthetic fibers.
C)raising the demand for wool.
D)raising the supply for wool.

Question 59

On the "supply side" of a market,producers indicate to consumers what they are willing to sell,in what quantity,and at what price.

Question 60

When a supply curve is drawn,which of the following is NOT held constant?

A)taxes and subsidies
B)the state of production technology
C)prices of inputs
D)the price of the good

Question 61

What happens if the price of a product is below the equilibrium price?

A)The buyers will stop purchasing a "cheap" product.
B)The producer will lower the price to make more profit.
C)There will be an excess demand for the product.
D)none of the above

Question 62

Suppose that the quantity supplied of cars exceeds the quantity of cars demanded.We would expect that:

A)the price of cars will increase.
B)the price of cars will decrease.
C)the supply will increase to meet the demand.
D)the demand will decrease to meet the supply.

Question 63

Figure 4.2
Figure 4.2 depicts three market situations.Which of the panels depicts a market in which the price is likely to fall?

A)Panel A
B)Panel B
C)Panel C
D)None of the panels depicts a market in which the price is likely to fall.

Question 64

Suppose that a market for a product is in equilibrium at a price of $5 per unit.At any price below $5 per unit:

A)there will be an excess demand for the product.
B)there will be an excess supply of the product.
C)the quantity supplied of the product will be greater than the quantity demanded of that product.
D)both B and C.

Question 65

Figure 4.2
Figure 4.2 depicts three market situations.Which of the panels depicts a market in which the price is likely to rise?

A)Panel A
B)Panel B
C)Panel C
D)None of the panels depicts a market in which the price is likely to rise.

Question 66

Rent control is an example of the government imposing:

A)a price ceiling.
B)an equilibrium price.
C)a price floor.
D)a minimum supply price.

Question 67

Figure 4.3
Figure 4.3 illustrates the supply and demand for blue jeans.If the actual price of blue jeans is $30,we would expect that:

A)demand will decrease until quantity demanded equals quantity supplied.
B)supply will increase until quantity demanded equals quantity supplied.
C)price will increase until quantity demanded equals quantity supplied.
D)there will be no change since the market is in equilibrium.

Question 68

Figure 4.3
Figure 4.3 illustrates the supply and demand for blue jeans.If the actual price of blue jeans is $30,we would expect the price of blue jeans to ________,the quantity demanded of blue jeans to ________,and the quantity supplied of blue jeans ________.

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

Question 69

Figure 4.3
Figure 4.3 illustrates the supply and demand for blue jeans.If the actual price of blue jeans is $50,we would expect that:

A)demand will increase until quantity demanded equals quantity supplied.
B)supply will decrease until quantity demanded equals quantity supplied.
C)price will decrease until quantity demanded equals quantity supplied.
D)no change will occur since the market is in equilibrium.

Question 70

Figure 4.3
Figure 4.3 illustrates the supply and demand for blue jeans.If the actual price of blue jeans is $50,we would expect the price of blue jeans to ________,the quantity demanded of blue jeans to ________,and the quantity supplied of blue jeans to ________.

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

Question 71

Suppose that the current price in a market for Pizza is $9.At that price,the quantity demanded is 519 and the quantity supplied is 400.At the current price,the market is experiencing:

A)an excess demand of 119 pizzas.
B)an equilibrium.
C)an excess supply of $119.
D)an excess demand of 500 pizzas.

Question 72

Figure 4.2
In Figure 4.2,which of the panels depicts a market in which there is an excess demand for a product?

A)Panel A
B)Panel B
C)Panel C
D)None of the panels depicts a market in which there is an excess demand for a product.

Question 73

Figure 4.3
Figure 4.3 illustrates the supply and demand for blue jeans.If the actual price of blue jeans is $30,there is:

A)excess demand of 40 pairs of blue jeans.
B)excess supply of 40 pairs of blue jeans.
C)excess demand of 50 pairs of blue jeans.
D)excess supply of 50 pairs of blue jeans.

Question 74

Figure 4.2
In Figure 4.2,which of the panels depicts a market in which there is an excess supply of a product?

A)Panel A
B)Panel B
C)Panel C
D)None of the panels depicts a market in which there is an excess supply of a product.

Question 75

When consumers are willing to buy more than producers are willing to sell:

A)there is excess supply of the product in the market.
B)there is excess demand for the product in the market.
C)the market is in equilibrium.
D)the demand curve will shift until the quantity supplied equals the quantity demanded.

Question 76

Suppose that the quantity demanded for cars exceeds the quantity supplied of cars.We would expect that:

A)the price of cars will increase.
B)the price of cars will decrease.
C)the supply will increase to meet the demand.
D)the demand will decrease to meet the supply.

Question 77

Suppose that a market for a product is in equilibrium at a price of $5 per unit.At any price above $5 per unit:

A)there will be an excess demand for the product.
B)there will be an excess supply of the product.
C)the quantity supplied of the product will be greater than the quantity demanded of that product.
D)both B and C.

Question 78

Suppose that the current price in a market for Pizza is $9.At that price,the quantity demanded is 519 and the quantity supplied is 400.In this market,we would expect that:

A)the price of pizzas would increase.
B)the price of pizzas would decrease.
C)buyers would want to buy more pizza in the future.
D)sellers would want to sell fewer pizzas in the future.

Question 79

A government sometimes creates an excess supply of a product by setting a minimum price at which the product may be sold to consumers.This is sometimes called a:

A)price ceiling.
B)price floor.
C)tax.
D)none of the above

Question 80

Figure 4.3
Figure 4.3 illustrates the supply and demand for blue jeans.If the actual price of blue jeans is $50,there is:

A)excess demand of 40 pairs of blue jeans.
B)excess supply of 40 pairs of blue jeans.
C)excess demand of 50 pairs of blue jeans.
D)excess supply of 50 pairs of blue jeans.