Deck 4: Supply and Demand

Question 1

Suppliers will supply more of a good when the price of that good rises because the opportunity cost of not producing that good has risen.

Answer 1

True

Question 2

When quantity demanded is greater than quantity supplied, the resulting shortage causes the price to fall.

Answer 2

False

Question 3

Refer to the graphs shown. The curve that best demonstrates the law of demand is:

A)I.
B)II.
C)III.
D)IV.

Answer 3

IV.

Question 4

According to the law of demand, an increase in the price of baseball trading cards causes:

A)people to buy fewer trading cards.
B)people to buy more trading cards.
C)the scarcity of baseball trading cards to increase.
D)baseball trading cards to grow in abundance.

Question 5

If cigar prices tripled while sales of cigars rose 30 percent, this would likely be due to a shift in demand.

Question 6

Movements down the rows (A to E)in the demand table are represented by movements up along a demand curve.
$$\begin{array} { | c | c | c | } \hline & \text { Price } & \text { Quantity } \\\hline \text { A } & 0 & 50 \\\hline \text { B } & 1 & 40 \\\hline \text { C } & 2 & 30 \\\hline \text { D } & 3 & 20 \\\hline E & 4 & 10 \\\hline\end{array}$$

Question 7

An increase in demand causes equilibrium price and quantity to rise, other things constant.

Question 8

Suppose that college tuition is higher this year than last year and that more students are enrolled in college this year than last year. Based on this information, we can best conclude that:

A)the law of demand is invalid.
B)despite the increase in price, quantity demanded rose due to some other factor changing.
C)this situation has nothing to do with the law of demand.
D)the demand for a college education is positively sloped.

Question 9

According to the law of demand, only the price of a good influences the amount people will choose to purchase.

Question 10

A demand curve is downward-sloping because as the price of a good falls, demanders will substitute some other good for that good whose price has fallen.

Question 11

The law of demand states that the quantity demanded of a good is inversely related to the price of that good. Therefore, as the price of a good goes:

A)up, the quantity demanded also goes up.
B)up, the quantity demanded goes down.
C)down, the quantity demanded goes down.
D)down, the quantity demanded stays the same.

Question 12

The explanation for the law of demand involves:

A)suppliers' ability to substitute inputs.
B)consumers' ability to substitute different goods.
C)the government's ability to set prices.
D)the market's ability to equate supply and demand.

Question 13

Refer to the graphs shown. If the quantity demanded by consumers is the same for every price, then the demand curve would look like:

A)I.
B)II.
C)III.
D)IV.

Question 14

At a price of $3.50, the quantity supplied by the market will be 14.
$$\begin{array} { | r | c | c | c | c | } \hline \text { Price } & \text { Ann's Supply } & \text { Barry's Supply } & \text { Charlie's Supply } & \begin{array} { c } \text { Market } \\\text { Supply }\end{array} \\\hline \$ 0.00 & 0 & 0 & 0 & 0 \\\hline 0.50 & 1 & 0 & 0 & 1 \\\hline 1.00 & 2 & 1 & 0 & 3 \\\hline 1.50 & 3 & 2 & 0 & 5 \\\hline 2.00 & 4 & 3 & 0 & 7 \\\hline 2.50 & 5 & 4 & 0 & - \\\hline 3.00 & 6 & 5 & 0 & - \\\hline 3.50 & 7 & 5 & 2 & - \\\hline 4.00 & 8 & 5 & 2 & - \\\hline\end{array}$$

Question 15

A change in the price of carrots will cause a movement along the demand curve for carrots and a shift in the demand for substitute vegetables.

Question 16

The law of demand states that consumers buy more of a good when its price declines:

A)because their income increases at the same time.
B)only if their income increases at the same time.
C)even if other demand determinants change at the same time.
D)provided all else remains constant.

Question 17

Which of the following situations best demonstrates the law of demand?

A)Movie-goers react to an increase in the price of a theater ticket by seeing fewer movies per year.
B)Movie-goers see fewer movies per year due to an overall decrease in the quality of newly released motion pictures.
C)A drought causes a decrease in the availability of pumpkins, resulting in fewer jack-o-lanterns displayed on Halloween.
D)An increase in the number of people writing Economics textbooks results in a decrease in average textbook prices.

Question 18

The law of supply states that more of a good will be supplied the lower its price, other things constant.

Question 19

An increase in the number of firms causes the price firms are able to charge to fall, which results in a movement along the market supply curve.

Question 20

An improvement in the technology for producing a good will shift the supply curve for that good to the left.

Question 21

If the price of chicken rises and the price of beef does not rise, consumers will respond by:

A)substituting beef for chicken.
B)substituting chicken for beef.
C)reducing purchases of beef and chicken.
D)increasing purchases of beef and chicken.

Question 22

Three hurricanes, combined with the already high real-estate prices, have made people reconsider whether to retire to Florida. The cost of homeownership has increased due to stricter building codes. The influx of retirees is expected to rise. Which of the following factors is tending to move the demand curve for Florida housing to the right?

A)The aging of the baby boomers, increasing the number of people who are retiring
B)The increase in the cost of insurance
C)The already high real-estate prices
D)The current high construction costs

Question 23

The effect of higher gasoline prices is most likely to:

A)increase the demand for hybrid cars and increase the demand for gas guzzlers.
B)decrease the demand for hybrid cars and decrease the demand for gas guzzlers.
C)increase the demand for hybrid cars and decrease the demand for gas guzzlers.
D)decrease the demand for hybrid cars and increase the demand for gas guzzlers.

Question 24

Refer to the graph showing the demand for books. If the price is changed from $12.00 to $4.00, the quantity demanded increases by:

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

Question 25

Which of the following would cause quantity demanded to change without changing the demand curve?

A)A change in income
B)A change in the price of the good
C)A change in tastes and preferences
D)A change in the price of a substitute good

Question 26

Tuition and fees for four year colleges in the United States have risen over five percent per year recently. One cause for the increase in price has been an increase in demand for college education. In the standard model, what could be a possible explanation for the increase in the demand for college education?

A)More colleges have been established
B)The cost of two-year colleges has declined over the same period
C)Income in the United States has risen
D)The price of all other goods in the economy has risen 3 percent over the same period

Question 27

Refer to the graphs showing the demand for music downloads. The effect of an increase in the price of music downloads on consumers is best shown by arrow:

A)A.
B)B.
C)C.
D)D.

Question 28

If the price of movies on DVD rises while the price of movies purchased on demand through the Internet remains the same, the law of demand predicts that consumers will:

A)substitute movies on DVD for movies on the Internet.
B)substitute movies on the Internet for movies on DVD.
C)buy only movies on DVD.
D)buy only movies on the Internet.

Question 29

According to the law of demand an increase in the price of gasoline will:

A)increase the quantity demanded of gasoline, other things constant.
B)decrease the quantity demanded of gasoline, other things constant.
C)increase the demand for gasoline.
D)decrease the demand for gasoline.

Question 30

The use of the phrase "other things constant" in supply and demand analysis indicates that:

A)an equilibrium price has been reached.
B)an equilibrium quantity has been reached.
C)we are considering changes in just one factor.
D)we are considering all the changes which might take place in actual markets.

Question 31

Which of the following is not held constant as you move along the demand curve?

A)The price of that good
B)The price of other goods
C)The incomes of consumers
D)The preferences of consumers for the good

Question 32

Refer to the graphs showing the demand for music downloads. What arrow shows the effect of an increase in the number of consumers in the market on the demand for music downloads?

A)A
B)B
C)C
D)D

Question 33

Sometimes price cuts can have an unintended result of consumers waiting for deeper discounts. What does this waiting suggest about supply and demand?

A)The demand curve slopes the wrong way because price cuts have lead to smaller sales.
B)If buyers are buying less when price falls, the supply curve must have moved left.
C)If buyers are buying less when price falls, the supply curve must have moved right.
D)Price cuts have changed buyers' expectations, and the change in expectations has moved the demand curve left.

Question 34

The distinction between demand and the quantity demanded is best made by saying that:

A)demand is represented graphically by a curve and quantity demanded is a point on that curve.
B)the quantity demanded is represented graphically by a curve and demand is a point on that curve.
C)the quantity demanded is in a direct relation with prices, whereas demand is in an inverse relation.
D)the quantity demanded is in an inverse relation with prices, whereas demand is in a direct relation.

Question 35

Refer to the graphs shown. If consumers began purchasing more of this product due to a decrease in price, this would be shown by arrow:

A)A.
B)B.
C)C.
D)D.

Question 36

Which of the following would likely result in an increase in the demand for beef?

A)A decrease in the supply of beef
B)An increase in family incomes
C)An increase in the price of feed grains for cattle
D)A decrease in the price of pork

Question 37

The growing popularity of a commercial weight-loss diet that includes reducing the amount of carbohydrates consumed will cause:

A)an increase in the demand for bread.
B)a decrease in the demand for bread.
C)a movement down and to the right along the demand for bread curve.
D)a movement up and to the left along the demand for bread curve.

Question 38

Refer to the graph showing the demand for books. The quantity demanded when price is $16.00 is:

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

Question 39

Refer to the graphs shown. The effect of an increase in price on demand is best shown by which arrow?

A)A
B)B
C)C
D)D

Question 40

Given that diesel cars get much better gas mileage than the typical car, an increase in the price of gasoline would be expected to:

A)increase the demand for diesel cars.
B)decrease the demand for gasoline.
C)decrease the demand for diesel cars.
D)increase the demand for gasoline.

Question 41

To derive a market demand curve from individual demand curves, it would be necessary to:

A)take the maximum quantity of each demand curve as the market quantity demanded at each price.
B)sum the curves horizontally, adding quantities demanded at each price.
C)take the demand curve that is the furthest to the right as the market demand curve.
D)multiply the quantities demanded on each demand curve at each price to find the market quantity demanded at each price.

Question 42

Consider the following demand table and the graph. $$\begin{array} { c } { \text { Demand Table } } \\\begin{array} { | c | c | } \hline \text { Price } & \text { Quantity demanded per week } \\\hline \$ 5.00 & 100 \\\hline \$ 4.00 & 150 \\\hline \$ 3.00 & 200 \\\hline \$ 2.00 & 250 \\\hline\end{array}\end{array}$$ Which of the demand curves best reflects the demand table?

A)A
B)B
C)C
D)D

Question 43

According to the law of supply:

A)supply curves slope upward.
B)supply curves slope downward.
C)price and quantity supplied are negatively related.
D)price and quantity supplied are inversely related.

Question 44

Refer to the graphs shown. An increase in quantity demanded is best shown by which arrow?

A)A
B)B
C)C
D)D

Question 45

Refer to the graphs shown. Assume the graph reflects demand in the automobile market. Which arrow best captures the impact of increased gasoline prices on the automobile market?

A)A
B)B
C)C
D)D

Question 46

Which statement is not consistent with the law of supply?

A)More of a good will be supplied, the higher the price, other things constant.
B)Less of a good will be supplied, the lower the price, other things constant.
C)Quantity supplied of a good is directly related to the good's price.
D)Quantity supplied of a good is inversely related to the good's price.

Question 47

According to the law of supply, what will motivate firms to increase their quantity supplied of a product?

A)Production cost
B)Fixed cost
C)Price
D)Supply

Question 48

Refer to the table that presents Mike and Janet's demand for apples by the bushel. If they are the only two in the market, a market demand curve derived from this data would show quantity demanded is: $\begin{array} { | c | c | c | } \hline \text { Price per pedk } & \text { Mike Quantity in pecks } &\text { Janet Quantity in pecks }\\\hline \$ 1 & 22 & 6 \\\hline \$ 2 & 18 & 3 \\\hline \$ 3 & 14 & 0 \\\hline \$ 4 & 10 & 0 \\\hline \$ 5 & 6 & 0 \\\hline\end{array}$

A)22 at price = $1 and 18 at price = $2.
B)21 at price = $1 and 17 at price = $2.
C)28 at price = $1 and 21 at price = $2.
D)21 at price = $1 and 28 at price = $2.

Question 49

Refer to the graphs shown. The curve that best illustrates the law of supply is:

A)I.
B)II.
C)III.
D)IV.

Question 50

The law of supply states that, other things constant, there is:

A)an inverse relation between price and the quantity supplied.
B)an inverse relation between price and supply.
C)a direct relation between price and the quantity supplied.
D)a direct relation between price and supply.

Question 51

Suppose farmers can use their land to grow either wheat or corn. The law of supply predicts that an increase in the market price of wheat will cause farmers to:

A)substitute wheat for the production of corn.
B)substitute corn for the production of wheat.
C)lower the production of corn and wheat.
D)raise the production of wheat and corn.

Question 52

Refer to the following graphs: Which curve depicts the market demand from the following individual demand tables? $$\begin{array} { | c | r | r | r | } \hline \text { Price } & { \text { D1 } } & { \text { D2 } } & { \text { D3 } } \\\hline 10 & 10 & 15 & 10 \\\hline 12 & 8 & 11 & 5 \\\hline 14 & 6 & 7 & 6 \\\hline 16 & 4 & 3 & 7 \\\hline 18 & 2 & 6 & 6 \\\hline\end{array}$$

A)I
B)II
C)III
D)IV

Question 53

Given the graph, the quantity that would be associated with the price of $1 in a demand table would be:

A)6.
B)5.
C)4.
D)3.

Question 54

Refer to the graph showing the demand for books. A movement from point E to point D is caused by:

A)an increase in the price of books from $12.00 to $16.00.
B)a decrease in the price of books from $16.00 to $12.00.
C)an increase in consumer income.
D)an increase in the price of movies.

Question 55

Refer to the graphs shown. The arrow that would best illustrate the impact on consumers of reducing sales tax on a good paid by suppliers is:

A)A.
B)B.
C)C.
D)D.

Question 56

Assume the graph shown reflects demand in the automobile market. Which arrow best captures the impact of increased consumer income on the automobile market?

A)A
B)B
C)C
D)D

Question 57

The law of supply states that, other things equal, as the price of a good goes:

A)up, the quantity supplied goes up.
B)up, the supply goes down.
C)down, the quantity supplied goes up.
D)down, the supply goes down.

Question 58

Refer to the graphs shown. Assume the graph reflects demand in the egg market. Which arrow best captures the impact of increased consumer concern about cholesterol on the egg market?

A)A
B)B
C)C
D)D

Question 59

Given the graph, the quantity that would be associated with the price of $4 in a demand table would be:

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

Question 60

Refer to the table that presents Mike and Janet's demand for apples by the bushel. If they are the only two in the market, which of the following represents a point on the market demand curve? $\begin{array} { | c | c | c | } \hline \text { Price per pedk } & \text { Mike Quantity in pecks } &\text { Janet Quantity in pecks }\\\hline \$ 1 & 22 & 6 \\\hline \$ 2 & 18 & 3 \\\hline \$ 3 & 14 & 0 \\\hline \$ 4 & 10 & 0 \\\hline \$ 5 & 6 & 0 \\\hline\end{array}$

A)price = $1, quantity = 18
B)price = $2, quantity = 21
C)price = $4, quantity = 0
D)price = $4, quantity = 21

Question 61

Assume the graphs shown reflect the egg market. The arrow that would best capture the impact of cheaper, prefabricated henhouses on the egg market is:

A)W.
B)X.
C)Y.
D)Z.

Question 62

Refer to the graphs shown. The arrow that best captures the impact of a decline in price on quantity supplied is:

A)W.
B)X.
C)Y.
D)Z.

Question 63

If Argentina imposes a 20 percent tax on natural gas exports to be paid by suppliers. Other things equal, this causes the:

A)supply of natural gas exports to shift to the right.
B)supply of natural gas exports to shift to the left.
C)quantity of natural gas exports produced to increase.
D)demand for natural gas exports to shift to the right.

Question 64

Refer to the graph showing the supply of books. A shift from S1 to S0 would most likely occur for what reason?

A)An increase in the number of suppliers in the market
B)A decrease in taxes levied on producers of books
C)An increase in the price of books
D)An increase in the cost of producing books

Question 65

An upward-sloping supply curve implies that:

A)quantity supplied increases when price decreases.
B)quantity supplied increases when price increases.
C)the law of supply is invalid.
D)there is no relationship between price and quantity supplied.

Question 66

Which of the following would be expected to cause the quantity of wool supplied to decrease?

A)A decrease in the price of wool
B)A decrease in the number of wool producers
C)An increase in the cost of raising sheep
D)An increase in wages paid to workers in the wool industry

Question 67

Moore's Law states that the processing power of the latest computer chips doubles about every eighteen months. Assuming the graphs demonstrate the market for the latest computer chips, which of the following diagrams describe this situation?

A)Graph a
B)Graph b
C)Graph c
D)Graph d

Question 68

Suppose when you are offered $8.00 per hour to work in the campus library, you choose not to work, but when you are offered $12.00 per hour, you accept a part-time position. Your behavior can best be explained by the fact that your supply of labor curve is:

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

Question 69

If the price of steel rises, the law of supply predicts that, other things constant, the:

A)supply of steel will increase.
B)supply of steel will decrease.
C)quantity supplied of steel will increase.
D)quantity supplied of steel will decrease.

Question 70

When applied to labor markets, the law of supply suggests that:

A)an increase in the wages earned by nurses will cause the quantity of nurses supplied to increase.
B)a decrease in the wages earned by nurses will cause the quantity of nurses supplied to increase.
C)an increase in the wages earned by nurses will cause the quantity of nurses demanded to increase.
D)a decrease in the wages earned by nurses will cause the quantity of nurses demanded to increase.

Question 71

Suppose OPEC oil cartel announces that it will increase production of oil. Using supply and demand analysis to predict the effect of increased production on equilibrium price and quantity, the first step is to show the:

A)demand curve shifting to the right.
B)demand curve shifting to the left.
C)supply curve shifting to the right.
D)supply curve shifting to the left.

Question 72

Refer to the graphs shown. If quantity supplied is a fixed amount that does not vary with price, then the supply curve looks like:

A)I.
B)II.
C)III.
D)IV.

Question 73

The distinction between supply and the quantity supplied is best made by saying that:

A)the quantity supplied is represented graphically by a curve and supply as a point on that curve.
B)supply is represented graphically by a curve and quantity supplied as a point on that curve.
C)the quantity supplied is in a direct relation with prices, whereas supply is in an inverse relation.
D)the quantity supplied is in an inverse relation with prices, whereas supply is in a direct relation.

Question 74

Refer to the graphs shown. The arrow that best shows an increase in supply is:

A)W.
B)X.
C)Y.
D)Z.

Question 75

The theory that quantity supplied and price are positively related, other things constant, is referred to as the law of:

A)opportunity cost.
B)profit maximization.
C)supply.
D)demand.

Question 76

Which of the following will move the supply curve for housing in Florida, a popular retirement state, to the left?

A)Increasing the number of people who are retiring
B)Increase in the cost of insurance
C)Higher real-estate prices
D)Higher construction costs

Question 77

Refer to the graph showing the supply of books. A shift from S0 to S1 would most likely occur for what reason?

A)A decrease in the number of suppliers in the market
B)An increase in taxes levied on producers of books
C)An increase in the price of books
D)A decrease in the cost of producing books

Question 78

Which of the following would not move either the supply or the demand curve in the market for housing?

A)An increase in the number of people who are retiring
B)An increase in the cost of home insurance
C)An increase in real-estate prices
D)A possibility of higher construction costs

Question 79

If the law requires apartment building owners to lower rent, the law of supply predicts that, other things constant, the:

A)supply of apartment units will shift leftward.
B)supply of apartment units will shift rightward.
C)quantity of apartment units supplied will rise.
D)quantity of apartment units supplied will fall.

Question 80

Graphically, a change in price causes:

A)both supply and demand to shift.
B)the demand curve to shift.
C)a movement along a given supply curve, not a shift.
D)the supply curve to shift.