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.

Accepted Answer

Each supply and demand model consists of three elements: price, quantity, and equilibrium. These elements describe the relationship between the quantity of a good or service that producers are willing to supply and the quantity that consumers are willing to purchase at a given price. The equilibrium point is where the quantity supplied equals the quantity demanded and determines the market price for the good or service.

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.

Accepted Answer

Quantity demanded refers to the amount of a good or service that consumers are willing to buy at a given price. It is a specific point on the demand curve, not the entire curve itself.

Question 3

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

Accepted Answer

The demand schedule is a table or list that shows the various prices at which a particular good or service is demanded by consumers and the corresponding quantities that they are willing and able to purchase at each price level. This information is often used by businesses and economists to understand the relationship between price and demand for a given product, and to make decisions about pricing, production, and sales strategies.

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

Accepted Answer

The demand curve for a good, such as good A, shows the relationship between the price of the good and the quantity demanded, holding all other factors constant. Therefore, the price of good A is not held constant when constructing its demand curve; it is the variable that changes to show how quantity demanded responds.

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.

Accepted Answer

A demand schedule lists the different prices for a good or service and the corresponding quantities consumers are willing to purchase at each price. Therefore, the correct choice is C, which states that a demand schedule lists the quantities people are willing to buy 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.

Accepted Answer

The typical slope of a demand curve is negative, meaning as price increases, quantity demanded decreases. This relationship is known as the law of demand. Choices A, C, and D are incorrect because they do not accurately describe the typical slope of a demand curve. Choice E is partially correct as income and consumer expectations can influence the slope of a demand curve, but it is not the typical slope.

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.

Accepted Answer

The law of demand states that as the price of a good or service increases, the quantity demanded of that good or service will decrease, ceteris paribus. This inverse relationship between price and quantity demanded is represented by the negative slope of the demand curve. As price increases along the horizontal axis, quantity demanded decreases along the vertical axis, resulting in a downward-sloping demand curve.

Question 8

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

Accepted Answer

The law of demand states that as the price of a product increases, the quantity demanded of that product will decrease, all other things being equal. Therefore, if demand for a product is high at a high price, it would violate the law of demand.

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.

Accepted Answer

According to the law of demand, there is an inverse relationship between price and quantity demanded. Therefore, if the price of compact disks decreases (ceteris paribus), consumers will be more likely to buy more of them, resulting in an increase in quantity demanded.

Question 10

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

Accepted Answer

According to the law of demand, the price of a product decreases when the quantity demanded increases, and vice versa.

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

Accepted Answer

Inputs refer to the resources needed to produce goods or services, which are not directly part of the supply and demand model. The supply and demand model only considers the relationship between price, quantity, market, and equilibrium.

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.

Accepted Answer

This is known as the law of demand, which states that as the price of a good or service increases, the quantity demanded of that good or service will decrease, and vice versa. This relationship holds true across most markets, regardless of government intervention. Thus, the correct answer is C, always negative 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.

Accepted Answer

The law of demand states that as the price of a product increases, consumers will generally buy less of that product. This is because as the price goes up, it becomes relatively more expensive compared to other goods and services, and consumers may choose to substitute other products instead. Conversely, if the price of a product decreases, consumers will generally buy more of it because it becomes relatively cheaper in comparison.

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.

Accepted Answer

When the price of apples increases, people will look for alternative fruits that are relatively cheaper. As a result, the demand for apples decreases, leading to a downward-sloping demand curve.

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.

Accepted Answer

The increase in fares per trip when more commuters use the Uber service could be due to the increase in the price of gasoline. Higher gasoline prices increase the operational costs for drivers, which could lead to higher fares to compensate for these increased costs. This explanation does not violate the law of demand or supply, nor does it necessarily imply that people were irrational or had no 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.

Accepted Answer

The law of demand states that as the price of a good or service increases, the quantity demanded for that good or service will decrease, and vice versa. Therefore, raising the price of tobacco through taxes or other measures would likely decrease the demand for it and reduce the amount of tobacco consumption. Lowering the price or subsidizing its use would likely have the opposite effect. Subsidizing treatments for diseases related to tobacco consumption may help individuals who are already addicted, but it wouldn't necessarily reduce the amount of tobacco consumption overall. Making tobacco consumption illegal would be a drastic measure that would likely have unintended consequences and could be difficult to enforce.

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.

Accepted Answer

Market equilibrium is a central concept in the supply and demand model, so statement E is false.

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.

Accepted Answer

The law of demand states that as the price of a good increases, the quantity demanded for that good will decrease, ceteris paribus. This means that if the price of a Gucci handbag increases, the quantity demanded for that handbag will decrease, not increase. The fact that the handbag has become more prestigious may affect consumer preferences and tastes, but it does not change the basic law of demand.

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.

Accepted Answer

The principle described is the definition of the law of demand. A states a general idea about consumer preferences, B describes the relationship between production costs and supply, D describes the relationship between the price of a good and the quantity supplied by producers, and E is not a recognized economic principle.

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.

Accepted Answer

The law of demand states that there is an inverse relationship between price and quantity demanded, meaning as price increases, quantity demanded decreases, and as price decreases, quantity demanded increases.

Quiz 3: The Supply and Demand Model

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

The term quantity demanded refers to

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

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

A demand schedule is a table of prices and

The typical slope of a demand curve

The law of demand is represented by

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

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

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

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

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

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

The demand curve for apples is downward-sloping because

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?

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

Which of the following statements is false?

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.

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

The law of demand states that