Deck 4: The Market Forces of Supply and Demand

Question 1

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

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

Answer 1

B

Question 2

Figure 4-1
Refer to Figure 4-1.The movement from point A to point B on the graph shows

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

Answer 2

B

Question 3

The demand for a good or service is determined by

A)those who buy the good or service.
B)the government.
C)those who sell the good or service.
D)both those who buy and those who sell the good or service.

Answer 3

A

Question 4

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 5

The forces that make market economies work are

A)work and leisure.
B)politics and religion.
C)supply and demand.
D)taxes and government spending.

Question 6

In a market economy,supply and demand are important because they

A)are direct policy tools used by government agencies to regulate the economy.
B)illustrate when an market is in equilibrium,but they are not helpful when a market is out of equilibrium.
C)can be used to predict the impact on the economy of various events and policies.
D)All of the above are correct.

Question 7

Table 4-1 $$\begin{array} { | c | c | c | c | } \hline \text { Price } & \begin{array} { c } \text { Quantity Demanded } \\\text { by Michelle }\end{array} & \begin{array} { c } \text { Quantity Demanded } \\\text { by Laura }\end{array} & \begin{array} { c } \text { Quantity Demanded } \\\text { by Hillary }\end{array} \\\hline \$ 5 & 5 & 4 & 11 \\\hline \$ 4 & 6 & 6 & 13 \\\hline \$ 3 & 7 & 8 & 15 \\\hline \$ 2 & 8 & 10 & 17 \\\hline \$ 1 & 9 & 12 & 19 \\\hline \$ 0 & 10 & 14 & 21 \\\hline\end{array}$$

-Refer to Table 4-1.If the market consists of Laura and Hillary only and the price falls by $1,the quantity demanded in the market increases by

A)2 units.
B)3 units.
C)4 units.
D)5 units.

Question 8

Most markets in the economy are

A)markets in which sellers,rather than buyers,control the price of the product.
B)markets in which buyers,rather than sellers,control the price of the product.
C)perfectly competitive.
D)highly competitive.

Question 9

When all market participants are price takers who have no influence over prices,the markets have

A)only a few buyers and sellers.
B)numerous sellers but only a few buyers.
C)numerous buyers but only a few sellers.
D)numerous buyers and sellers.

Question 10

An increase in quantity demanded

A)results in a movement downward and to the right along a demand curve.
B)results in 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 11

A decrease in the price of a good will

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

Question 12

Table 4-1 $$\begin{array} { | c | c | c | c | } \hline \text { Price } & \begin{array} { c } \text { Quantity Demanded } \\\text { by Michelle }\end{array} & \begin{array} { c } \text { Quantity Demanded } \\\text { by Laura }\end{array} & \begin{array} { c } \text { Quantity Demanded } \\\text { by Hillary }\end{array} \\\hline \$ 5 & 5 & 4 & 11 \\\hline \$ 4 & 6 & 6 & 13 \\\hline \$ 3 & 7 & 8 & 15 \\\hline \$ 2 & 8 & 10 & 17 \\\hline \$ 1 & 9 & 12 & 19 \\\hline \$ 0 & 10 & 14 & 21 \\\hline\end{array}$$

-Refer to Table 4-1.Which of the following illustrates the market demand curve?

A)
B)
C)
D)

Question 13

The supply of a good or service is determined by

A)those who buy the good or service.
B)the government.
C)those who sell the good or service.
D)both those who buy and those who sell the good or service.

Question 14

In a perfectly competitive market,at the market price,buyers

A)cannot buy all they want,and sellers cannot sell all they want.
B)cannot buy all they want,but sellers can sell all they want.
C)can buy all they want,but sellers cannot sell all they want.
D)can buy all they want,and sellers can sell all they want.

Question 15

Which of the following would most likely serve as an example of a monopoly?

A)a bakery in a large city
B)a bank in a large city
C)a local cable television company
D)a small group of corn farmers

Question 16

In a competitive market,the quantity of a product produced and the price of the product are determined by

A)buyers.
B)sellers.
C)both buyers and sellers.
D)None of the above is correct.

Question 17

A monopoly is a market with one

A)seller,and that seller is a price taker.
B)seller,and that seller sets the price.
C)buyer,and that buyer is a price taker.
D)buyer,and that buyer sets the price.

Question 18

Which of the following is an example of a market?

A)a gas station
B)a garage sale
C)a barber shop
D)All of the above are examples of markets.

Question 19

If a seller in a competitive market chooses to charge more than the going price,then

A)the sellers' profits must increase.
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 prices.
D)buyers will make purchases from other sellers.

Question 20

Soup is an inferior good if the demand

A)for soup falls when the price of a substitute for soup rises.
B)for soup rises when the price of soup falls.
C)curve for soup slopes upward.
D)for soup falls when income rises.

Question 21

If the price of a good is low,

A)firms would increase profit by increasing output.
B)the quantity supplied of the good could be zero.
C)the supply curve for the good will shift to the left.
D)firms can and should raise the price of the product.

Question 22

Figure 4-2
The graph below pertains to the supply of paper to colleges and universities.
Refer to Figure 4-2.All else equal,buyers expecting paper to be more expensive in the future would cause a current move from

A)x to y.
B)y to x.
C)S_A to S_B.
D)S_B to S_A.

Question 23

Which of the following would cause price to decrease?

A)a decrease in supply
B)an increase in demand
C)a surplus of the good
D)a shortage of the good

Question 24

In markets,prices move toward equilibrium because of

A)the actions of buyers and sellers.
B)government regulations placed on market participants.
C)increased competition among sellers.
D)buyers' ability to affect market outcomes.

Question 25

What will happen in the artichoke market now if buyers expect higher artichoke prices in the near future?

A)The demand for artichokes will increase.
B)The demand for artichokes will decrease.
C)The demand for artichokes will be unaffected.
D)The supply of artichokes will increase.

Question 26

The sum of all the individual supply curves for a product is called

A)total supply.
B)market supply.
C)aggregate supply.
D)total output.

Question 27

An increase in the price of a good will

A)increase supply.
B)decrease supply.
C)increase quantity supplied.
D)decrease quantity supplied.

Question 28

The unique point at which the supply and demand curves intersect is called

A)market harmony.
B)coincidence.
C)equivalence.
D)equilibrium.

Question 29

From the above figure,at a price of

A)$2,there is a surplus of 6 units.
B)$5,there is a surplus of 25 units.
C)$5,there is a shortage of $25.
D)$7,there is a surplus of 4 units.

Question 30

Table 4-2 $$\begin{array} { | c | c | c | c | c | } \hline \text { Price } & \begin{array} { c } \text { FirmA's } \\\text { Quantity } \\\text { Supplied }\end{array} & \begin{array} { c } \text { Firm B's } \\\text { Quantity } \\\text { Supplied }\end{array} & \begin{array} { c } \text { Firm C's } \\\text { Quantity } \\\text { Supplied }\end{array} & \begin{array} { c } \text { Fim D's } \\\text { Quantity } \\\text { Supplied }\end{array} \\\hline \$ 0 & 10 & 0 & 0 & 0 \\\hline \$ 2 & 8 & 3 & 4 & 5 \\\hline \$ 4 & 6 & 6 & 8 & 10 \\\hline \$ 6 & 4 & 9 & 12 & 15 \\\hline \$ 8 & 2 & 12 & 8 & 20 \\\hline \$ 10 & 0 & 15 & 4 & 25 \\\hline\end{array}$$

-Refer to Table 4-2.Which supply schedules obey the law of supply?

A)Firm A's only
B)Firm B's,Firm C's,and Firm D's only
C)Firm A's and Firm C's only
D)Firm B's and Firm D's only

Question 31

When the price of a good is lower than the equilibrium price,

A)a surplus will exist.
B)buyers desire to purchase more than is produced.
C)sellers desire to produce and sell more than buyers wish to purchase.
D)quantity supplied exceeds quantity demanded.

Question 32

The difference between a supply schedule and a supply curve is that a supply schedule

A)incorporates demand and a supply curve does not.
B)incorporates profit and a supply curve does not.
C)can shift,but a supply curve cannot shift.
D)is a table,and a supply curve is drawn on a graph.

Question 33

Table 4-2 $$\begin{array} { | c | c | c | c | c | } \hline \text { Price } & \begin{array} { c } \text { FirmA's } \\\text { Quantity } \\\text { Supplied }\end{array} & \begin{array} { c } \text { Firm B's } \\\text { Quantity } \\\text { Supplied }\end{array} & \begin{array} { c } \text { Firm C's } \\\text { Quantity } \\\text { Supplied }\end{array} & \begin{array} { c } \text { Fim D's } \\\text { Quantity } \\\text { Supplied }\end{array} \\\hline \$ 0 & 10 & 0 & 0 & 0 \\\hline \$ 2 & 8 & 3 & 4 & 5 \\\hline \$ 4 & 6 & 6 & 8 & 10 \\\hline \$ 6 & 4 & 9 & 12 & 15 \\\hline \$ 8 & 2 & 12 & 8 & 20 \\\hline \$ 10 & 0 & 15 & 4 & 25 \\\hline\end{array}$$

-Refer to Table 4-4.If these are the only four sellers in the market,then when the price increases from $6 to $8,the market quantity supplied

A)increases by 0.5 units.
B)increases by 2 units.
C)decreases by 4 units.
D)increases by 42 units.

Question 34

At the equilibrium price,the quantity of the good that buyers are willing and able to buy

A)is greater than the quantity that sellers are willing and able to sell.
B)exactly equals the quantity that sellers are willing and able to sell.
C)is less than the quantity that sellers are willing and able to sell.
D)Either a)or c)could be correct.

Question 35

"Other things equal,when the price of a good rises,the quantity supplied of the good also rises,and when the price falls,the quantity supplied falls as well." This relationship between price and quantity supplied

A)is referred to as the law of supply.
B)applies only to a few goods in the economy.
C)is represented by a downward-sloping supply curve.
D)All of the above are correct.

Question 36

When quantity supplied increases at every possible price,we know that the supply curve has

A)shifted to the left.
B)shifted to the right.
C)not shifted; rather,we have moved along the supply curve to a new point on the same curve.
D)not shifted; rather,the supply curve has become flatter.

Question 37

The quantity supplied of a good is the amount that

A)buyers are willing and able to purchase.
B)sellers are able to produce.
C)buyers and sellers agree will be brought to market.
D)sellers are willing and able to sell.

Question 38

Figure 4-2
The graph below pertains to the supply of paper to colleges and universities.
Refer to Figure 4-2.All else equal,an increase in the price of the pulp used in the paper production process would cause a move from

A)x to y.
B)y to x.
C)S_A to S_B.
D)S_B to S_A.

Question 39

An increase in quantity supplied

A)results in a movement downward and to the left along a fixed supply curve.
B)results in a movement upward and to the right along a fixed supply curve.
C)shifts the supply curve to the left.
D)shifts the supply curve to the right.

Question 40

Equilibrium price must increase when demand

A)increases and supply does not change,when demand does not change and supply decreases,and when demand decreases and supply increases simultaneously.
B)increases and supply does not change,when demand does not change and supply decreases,and when demand increases and supply decreases simultaneously.
C)decreases and supply does not change,when demand does not change and supply increases,and when demand decreases and supply increases simultaneously.
D)decreases and supply does not change,when demand does not change and supply increases,and when demand increases and supply decreases simultaneously.

Question 41

A market is a group of buyers and sellers of a particular good or service.

Question 42

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

Question 43

In a market economy,supply and demand determine both the quantity of each good produced and the price at which it is sold.

Question 44

When a supply curve or a demand curve shifts,the equilibrium price and equilibrium quantity change.

Question 45

In a market economy,prices are the signals that guide the allocation of scarce resources.

Question 46

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

Question 47

Fill in the table below,showing whether equilibrium price and equilibrium quantity go up,go down,stay the same,or change ambiguously.

Question 48

An increase in the price of a product and an increase in the number of sellers in the market affect the supply curve in the same general way.

Question 49

A decrease in income will shift the demand curve for an inferior good to the right.

Question 50

An increase in the price of ink will shift the supply curve for pens to the left.

Question 51

The signals that guide the allocation of resources in a market economy are

A)surpluses and shortages.
B)quantities.
C)government policies.
D)prices.

Question 52

If a determinant of demand other than price changes,the demand curve shifts.

Question 53

Figure 4-2
The graph below pertains to the supply of paper to colleges and universities.
Refer to Figure 4-2.All else equal,the return of college students to campus in the fall would cause a move from

A)x to y.
B)y to x.
C)S_A to S_B.
D)S_B to S_A.

Question 54

If a good or service has only one seller,then the seller is called a monopoly.

Question 55

Prices allocate a market economy's scarce resources.

Question 56

The law of demand states that,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.

Question 57

In a perfectly competitive market,buyers and sellers are price setters.

Question 58

Who gets scarce resources in a market economy?

A)the government
B)whoever the government decides gets them
C)whoever wants them
D)whoever is willing and able to pay the price

Question 59

In a competitive market,the quantity of each good produced and the price at which it is sold are not determined by any single buyer or seller.