Deck 4: The Market Forces of Supply and Demand

Question 1

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

Answer 1

False

Question 2

The clothing market is a good example of perfect competition.

Answer 2

True

Question 3

In economics, a market is a place where people buy fruit and vegetables.

Answer 3

False

Question 4

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

Question 5

The stock market is a monopoly.

Question 6

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

Question 7

A competitive market is one in which sellers and buyers can choose the price at which they wish to buy or sell goods.

Question 8

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

Question 9

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

Question 10

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

Question 11

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

Question 12

A market with just one seller is said to be 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

If a rise in the price of a visit to the gym causes an increase in the demand for movie tickets, visits to the gym and trips to the movies are complements.

Question 15

Market demand is obtained by adding individual demand curves vertically.

Question 16

In Australia, a public transport operator might be a monopolist.

Question 17

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

Question 18

Tastes and expectations are not determinants of individual demand.

Question 19

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

Question 20

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

Question 21

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

Question 22

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

Question 23

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 24

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

Question 25

The supply curve has a negative slope.

Question 26

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

Question 27

If a tupperware company discovers that the price of plastic has risen by 10%, the company will decide to supply more tupperware to the market.

Question 28

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 29

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

Question 30

Movies and popcorn are complementary goods.

Question 31

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

Question 32

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

Question 33

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

Question 34

When an increase in the price of one good lowers the price of another good, the two goods are called substitutes.

Question 35

A demand schedule shows how much will be demanded of a good in the future.

Question 36

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

Question 37

An increase in the number of buyers in the market will cause a rightward shift in the demand curve if the good is a normal good.

Question 38

Jack usually eats a lot of noodles.He reads an article saying that rice has twice the health benefits of noodles.His demand curve for noodles is likely to shift right.

Question 39

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

Question 40

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 41

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 42

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 43

When analysing how some event affects a market, we check whether the price is the same as the quantity demanded.

Question 44

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

Question 45

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 46

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

Question 47

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

Question 48

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

Question 49

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

Question 50

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

Question 51

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

Question 52

In a monopoly market, equilibrium is always achieved.

Question 53

A change in the cost of producing a good will cause a change in the quantity supplied of a good.

Question 54

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

Question 55

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

Question 56

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

Question 57

Surpluses drive price up, whereas shortages drive price down.

Question 58

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

Question 59

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

Question 60

If demand and supply both increase, quantity demanded will always increase, no matter how big the changes in supply and demand.

Question 61

A perfectly competitive market DOES NOT have which of the following characteristics?

A)many buyers
B)several buyers which have a large impact on the price of goods
C)many goods which are very similar
D)many sellers

Question 62

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 63

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

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

Question 64

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

Question 65

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

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

Question 66

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 67

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

Question 68

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 69

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

Question 70

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 71

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

Question 72

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

Question 73

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 74

Normal and inferior goods are substitutes.

Question 75

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 76

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 77

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

Question 78

In a free market, the relationship between price and quantity demanded of a good can be called:

A)supply and demand
B)the law of demand
C)the Phillips curve
D)market demand

Question 79

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 80

Generally, the market for water in your town 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