Deck 3: The Supply and Demand Model

Question 1

Each supply and demand model consists of all the following three elements:

A) math, geometry, and equations.
B) supply, demand, and production possibilities.
C) inputs, outputs, and production.
D) technology, profit maximization, and government regulation.
E) price, quantity, and equilibrium.

Answer 1

E

Question 2

The term quantity demanded refers to

A) that point where the supply and demand curves cross.
B) the amount of a good consumers are willing to buy at a given price.
C) a particular demand schedule.
D) the entire demand curve.
E) the amount of a good people must forcibly demand from a producer in order to survive.

Answer 2

B

Question 3

The demand schedule is a table or list of the prices and corresponding quantities demanded of a particular good or service.

Answer 3

True

Question 4

Which of the following is not held constant when constructing a demand curve for good A?

A) Price of good A
B) Consumer tastes
C) Prices of other goods
D) Consumer expectations
E) Consumer income

Question 5

A demand schedule is a table of prices and

A) minimum quantities people have purchased at each price.
B) quantities people are able to purchase at each price.
C) quantities people are willing to buy at each price.
D) quantities people have purchased at each price.
E) quantities people are willing to produce at each price.

Question 6

The typical slope of a demand curve

A) is positive.
B) is negative.
C) is zero.
D) is infinity.
E) depends on factors such as income and consumer expectations.

Question 7

The law of demand is represented by

A) the positive slope of the demand curve.
B) the negative slope of the demand curve.
C) a shift of the demand curve to the right when price increases.
D) a shift of the demand curve to the left when price decreases.
E) a shift of the demand curve when income changes.

Question 8

The law of demand is violated when the demand for a product is high at a high price.

Question 9

According to the law of demand, if the price of compact disks decreased, ceteris paribus, the

A) demand for compact disks would decrease.
B) quantity demanded of compact disks would decrease.
C) demand for compact disks would increase.
D) quantity demanded of compact disks would not change.
E) quantity demanded of compact disks would increase.

Question 10

According to the law of demand, the price of a product increases when the quantity demanded increases.

Question 11

Which of the following is not an element of the supply and demand model?

A) Price
B) Inputs
C) Market
D) Equilibrium
E) Quantity

Question 12

The relationship between price and quantity demanded, other things being equal, is

A) negative in some markets but positive in other markets.
B) negative in markets without government intervention but positive in markets with government intervention.
C) always negative in any market.
D) positive in markets without government intervention but negative in markets with government intervention.
E) always positive in any market.

Question 13

The law of demand states that, as the price of a product increases, consumers

A) buy more of that product.
B) buy less of that product.
C) buy more of other related products.
D) buy less of other related products.
E) may buy more or less of that product.

Question 14

The demand curve for apples is downward-sloping because

A) when fewer apples are produced, the money in people's apple budgets does not have to stretch as far.
B) there must have been an apple blight, so there must be fewer apples to buy.
C) when apple prices rise, the price of other goods must also be rising, so people cannot afford to buy as much.
D) at higher apple prices, people will seek other, relatively cheaper alternatives, like pears, oranges, or plums.
E) at higher prices, apples are more expensive to produce, so fewer are grown.

Question 15

Suppose you observe that fares per trip for the Uber share-riding service increased when more commuters called the Uber service. Which of the following is the best possible explanation?

A) The law of demand was violated.
B) The law of supply was violated.
C) The price of gasoline went up.
D) People were irrational.
E) Commuters did not have any choice.

Question 16

According to the law of demand, one way to reduce the amount of tobacco consumption is to

A) lower the price of tobacco.
B) raise the price of tobacco.
C) subsidize users of tobacco.
D) subsidize treatments of diseases related to tobacco consumption.
E) make tobacco consumption illegal.

Question 17

Which of the following statements is false?

A) The supply and demand model serves to illustrate market behavior.
B) Supply and demand must be combined for either to be useful in explaining and predicting market behavior.
C) Supply illustrates the behavior of firms in a market.
D) Demand illustrates the behavior of consumers in a market.
E) Market equilibrium is not an important element of the supply and demand model.

Question 18

According to the law of demand, when the price of a Gucci handbag increases, the quantity demanded for these goods will also increase because the goods have become more prestigious.

Question 19

The principle that consumers tend to buy less of a good or service when its price increases, all else held equal, is called the law of

A) preferences.
B) increasing cost.
C) demand.
D) supply.
E) maximum satisfaction.

Question 20

The law of demand states that

A) as price decreases, demand increases.
B) as price increases, quantity demanded increases.
C) there is a direct relationship between price and quantity supplied.
D) there is an inverse relationship between price and quantity demanded.
E) there is an inverse relationship between price and quantity supplied.

Question 21

The slope of a demand curve can be positive, negative, or zero.

Question 22

A demand curve is always flat.

Question 23

Which of the following will not increase the demand for a good?

A) An expectation of a decline in the product price in the future
B) The product price falls, ceteris paribus.
C) An increase in the price of a substitute
D) A decrease in the price of a complement
E) A foreign country opens its markets to imports from others.

Question 24

When incomes are rising, new SUV sales increase while used SUV sales decrease. This indicates that

A) used SUVs and new SUVs are both normal goods.
B) used SUVs are inferior goods and new SUVs are normal goods.
C) used SUVs and new SUVs are complements.
D) used SUVs and new SUVs are substitutes.
E) used SUVs are normal goods and new SUVs are inferior goods.

Question 25

If an increase in the price of product A causes an increase in the demand for product B, we can conclude that

A) they are inferior goods.
B) the price of B will decrease.
C) they are complements.
D) they are substitutes.
E) the quantity supplied for B will decrease.

Question 26

The demand for goods sold in discount stores increases when consumer incomes fall in a recession. We can conclude that goods sold in discount stores

A) are normal goods.
B) are luxury goods.
C) are inferior goods.
D) are complements of goods sold in department stores.
E) have no substitutes.

Question 27

When consumers expect the price of a good to go down in the future, demand will

A) decrease in the future.
B) decrease today.
C) increase in the future.
D) not change.
E) increase today.

Question 28

Peanut butter and jelly are complements so that if the price of peanut butter increases, the

A) quantity demanded for jelly increases.
B) quantity demanded for jelly decreases.
C) demand for jelly increases.
D) demand for jelly decreases.
E) demand for jelly remains the same.

Question 29

The demand curve is a relationship between the price of a good and the quantity consumers are willing to buy at that price.

Question 30

When economists say that the demand for a product has increased, they mean that consumers are willing to buy more of the product at any given price.

Question 31

If the price of product A falls and this causes the demand for product B to shift to the right, then we can conclude A and B are

A) normal.
B) inferior.
C) complements.
D) substitutes.
E) not related.

Question 32

Coffee and tea are substitutes so that if the price of tea increases, the

A) quantity demanded for coffee increases.
B) quantity demanded for coffee decreases.
C) demand for coffee increases.
D) demand for coffee decreases.
E) demand for coffee remains the same.

Question 33

A demand curve represents the relationship between consumer income and the quantity demanded.

Question 34

When economists say that the demand for a product has decreased, they mean that

A) consumers are going to purchase less at any given price.
B) the price has increased and consumers will purchase less of the product.
C) the demand curve has shifted to the right.
D) the product has become more abundant and consumers therefore want it less.
E) consumers would be willing to pay less to receive the same quantity.

Question 35

Which of the following leads to a leftward shift of the demand curve?

A) An expectation of a decline in the product price in the future
B) A decrease in the good's own price
C) An increase in the price of a substitute
D) A decrease in the price of a complement
E) An increase in the number of consumers

Question 36

Consider the market for pop music played with an iPod. If there is a decrease in the number of pop music programs broadcast on radio, we can expect

A) the profits of the pop music industry to decrease.
B) the demand for pop music to decrease.
C) the demand for iPods to increase.
D) less pop music to be listened to on iPods.
E) the price of iPods to decline.

Question 37

The demand for apples shifts rightward when consumers react to a lower apple price by buying more.

Question 38

Suppose that hotdogs are inferior goods. Which of the following is true given an increase in consumer income?

A) An upward movement along the demand curve of hotdogs
B) A downward movement along the demand curve of hotdogs
C) A leftward shift in the demand curve of hotdogs
D) A rightward shift in the demand curve of hotdogs
E) No change in the demand curve of hotdogs

Question 39

Which of the following will increase the demand for a normal good?

A) A decrease in the number of consumers
B) A decrease in the price of a substitute
C) An increase in consumer income
D) An increase in the price of a complement
E) An increase in the demand for a substitute

Question 40

Which of the following statements is false?

A) A demand curve is a visual representation of a demand schedule.
B) A demand curve is typically drawn with quantity demanded on the horizontal axis.
C) A demand curve is derived from different quantities produced.
D) A demand curve is typically drawn with price on the vertical axis.
E) A demand curve is always downward sloping.

Question 41

List four factors that affect willingness to buy and that shift the demand curve.

Question 42

If the price of a product decreases, then the demand curve shifts to the right.

Question 43

An increase in consumer income causes a movement up along the demand curve.

Question 44

The law of supply states that the quantity supplied of a good is positively related to the price of that good.

Question 45

Which of the following statements is true?

A) An increase in quantity demanded means a movement along a given demand curve.
B) An increase in demand means a movement along a given demand curve.
C) An increase in demand means that consumers will purchase less of a product at each possible price.
D) Price and quantity demanded are positively related.
E) An increase in demand always means the same as an increase in quantity demanded.

Question 46

The term quantity supplied refers to

A) the minimum quantity producers must sell in order to stay in business.
B) the quantity where the supply and demand curves cross.
C) a supply schedule.
D) the entire supply curve.
E) the amount of a good producers are willing to sell at a given price.

Question 47

An increase in demand is graphically illustrated by

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

Question 48

What is the difference between a decrease in demand and a decrease in quantity demanded?

Question 49

What is the principle that explains the relationship between price and quantity demanded?

Question 50

If goods X and Y are substitutes, then the demand for good X increases when the price of good Y decreases.

Question 51

Does the following condition violate the law of demand? Explain your answer.
"The number of iPhones sold last year was more the than the number of Nokia smartphones sold in the same period, even though the price of iPhones was more than twice of the price of Nokia smartphones."

Question 52

A higher price leads to a leftward shift of the demand curve.

Question 53

If the price of ice cream decreases, then the

A) quantity demanded for ice cream will increase.
B) demand for ice cream will decrease.
C) demand for ice cream will increase.
D) quantity demanded for ice cream will decrease.
E) supply of ice cream will decrease.

Question 54

Why does the law of demand hold?

Question 55

Which of the following causes a movement along the demand curve for bananas?

A) Consumers expect an increase in the price of bananas.
B) Consumer income decreases.
C) The price of bananas increases.
D) The price of oranges decreases.
E) The supply of bananas increases.

Question 56

The demand curve for a particular good shifts when any factor other than the price of that good changes.

Question 57

The law of supply states that

A) price and quantity supplied are inversely related.
B) price and supply are positively related.
C) the higher the price, the smaller the quantity that will be sold.
D) price and quantity supplied are positively related.
E) price and quantity demanded are inversely related.

Question 58

If the demand curve for product X shifts to the left as the price of product Y increases, then X and Y are complementary goods.

Question 59

According to the law of supply, if the price of calculators decreased, the supply of calculators would decrease, everything else held equal.

Question 60

Which of the following will not cause the demand for ice cream to change?

A) A change in population size
B) A change in the price of ice cream
C) A change in consumer incomes
D) A change in the price of yogurt
E) A change in seasons

Question 61

The supply curve represents the relationship between the quantities of a good that sellers are willing and able to supply and different prices of that good.

Question 62

The supply curve for iPhones is upward-sloping because

A) when the price of an iPhone rises, it must be due to increased costs in producing iPhones, so producers must charge more.
B) a higher iPhone price gives shoe producers incentive to produce more iPhones.
C) iPhones are produced by only a few producers.
D) iPhone producers always want to satisfy the demand for iPhones by consumers.
E) as the price of an iPhone rises, per-unit costs of production fall.

Question 63

A rightward shift of a supply curve represents an increase in supply.

Question 64

Market equilibrium is determined by

A) the producers in the market.
B) the largest consumers in the market.
C) all producers and consumers together.
D) the consumers in the market.
E) the largest firms in the market.

Question 65

An increase in production due to better technology is represented by a movement along the supply curve.

Question 66

When economists say that the demand for a product has decreased, they mean that

A) a greater quantity will be produced at any price.
B) the price is too high for equilibrium.
C) a smaller quantity will be produced at any price.
D) demand was too high for producers to make a profit.
E) the price is too low for equilibrium.

Question 67

Other things being equal, the quantity supplied decreases as price increases.

Question 68

Equilibrium prices are determined by

A) supply alone.
B) demand alone.
C) both supply and demand.
D) the government.
E) nothing at all.

Question 69

An increase in production costs shifts the supply curve leftward.

Question 70

What is the underlying cause of the law of supply?

Question 71

What is the difference between an increase in supply and an increase in quantity supplied?

Question 72

Why does supply slope upward?

Question 73

Market equilibrium occurs when the

A) quantity supplied equals quantity demanded.
B) quantity supplied is greater than quantity demanded.
C) quantity supplied is less than quantity demanded.
D) quantity supplied is fixed by the government.
E) quantity demanded equals zero.

Question 74

All else being equal, if there is a change in the price of a good, then the supply of that good will change.

Question 75

All else held equal, if the price of sirloin steak increases from $4.25 to $8.60 per pound, a greater quantity of sirloin steak will be supplied.

Question 76

A change in the quantity supplied is reflected by a shift of the supply curve.

Question 77

Which of the following is not held constant when constructing a supply curve for good X?

A) Number of firms producing good X
B) Price of inputs
C) Price of good X
D) Producer expectations
E) Production technology

Question 78

The supply curve slopes downward because sellers attempt to sell more when price drops.

Question 79

List four factors that affect willingness to sell and that shift the supply curve.

Question 80

An increase in the minimum wage will not affect the supply of hamburgers sold by McDonald's, which hires workers mostly at the minimum wage rate.