Markets, supply and demand Quiz

Why does supply slope up?

At higher prices, suppliers can profitably produce using more expensive techniques and inputs.

If the price of Netflix decreases, what will happen in the market for Hulu?

Demand will decrease, quantity supplied will decrease, and price will decrease.

An increase in the price of corn will lead to a decrease in the DEMAND for corn.

False

An inferior good is one of poor quality.

False

Demand for a good or service increases when the consumer's income rises, regardless of whether the good is a normal good or inferior good.

False

There is no difference between saying that there is a change in supply and saying that there is a change in the quantity supplied.

False

A firm produces volleyballs and soccer balls. What happens to the supply of soccer balls if the market price of volleyballs increases?

The opportunity cost of producing soccer balls rises, so the supply curve of soccer balls decreases.

Coke and Pepsi are substitute soft drinks. Which of the following would cause the demand curve for Pepsi to shift to the left?

The price of Coke decreases.

New production technology in the manufacture of 4K ultra-high-definition television screens has reduced the cost of production. What effect will this have in the market for televisions?

The supply curve will shift to the right.

Anonymity on the Internet has lowered the cost of rudely confronting people. What has happened to the supply of rude confrontations?

The supply has increased, shifting down and to the right.

Suppose a fungus wipes out the tomato crop in the southeast. What will happen in the tomato market?

The supply of tomatoes will decrease, leading to a higher equilibrium price.

A change in price is reflected by a movement along the same demand curve, while a change in demand refers to a shift of the entire demand curve.

True

A decrease in the supply of milk will lead to a decrease in the QUANTITY DEMANDED of milk.

True

If golf course fees decrease, the demand for golf balls will increase.

True

An increase in supply refers to:

a rightward shift of the supply curve.

The quantity supplied is the:

amount of a good that firms are willing and able to sell at a particular price during a given period of time.

Weather forecasters predict that a major winter storm will strike your town within the next few days. Which would occur today based on the expected storm?

an increase in people's willingness to pay for electric generators

A local university decides to double its enrollment over the next five years in order to increase tuition revenue. Which of the following would most likely occur in the market for rental housing in the surrounding community?

an increase in the demand for rental housing

Which of the following are likely to be complements?

books and book-lights

The movie trilogy The Lord of the Rings was hugely successful, and, as a result, the demand for fantasy novels, action figures, and online role-playing games surged. The increase in demand can be explained by a(n):

change in tastes.

If the price of Nike Air Max 1 shoes is below the equilibrium price:

competition will eventually push the price up.

The quantity demanded of a good or service is the amount that:

consumers are willing and able to buy at a given price.

Demand slopes down because:

consumers will choose to use goods only in their higher-valued uses when prices are high.

Assume that spaghetti is an inferior good for most people. As peoples' incomes increase, all other things held constant, the demand for spaghetti will:

decrease, shifting the demand curve to the left.

An increase in production costs at any given quantity:

decreases supply.

The most important tools in economics, according to the textbook, are supply, demand, and the:

idea of equilibrium.

If the demand curve for a normal good shifts downward and to the left:

income has decreased.

The average age in the United States is _____, causing the demand for prescription drugs to _____.

increasing; increase

The demand curve shows the relationship between:

price and quantity demanded.

If the market for Apple Watches experiences a surplus, then the:

price of Apple Watches will fall.

What are factors that shift the demand curve?

price of substitutes, tastes, price of complements

The demand curve:

shows how much buyers are willing and able to buy at different prices.

The supply curve:

shows how much sellers are willing and able to sell at different prices.

Immediately following a decrease in the demand for a product, a _____ occurs, which puts _____ pressure on prices.

surplus; downward

If sellers want to sell more products than buyers are willing to purchase, we know that:

the current price is greater than the equilibrium price.

The law of demand states that:

the lower the price, the greater the quantity demanded.

A shortage occurs when:

the quantity demanded is greater than the quantity supplied.

A demand curve indicates that:

the quantity demanded of a good is higher when its price is lower.