Supply and Demand Practice Quiz

With a downsloping demand curve and an upsloping supply curve for a product, an increase in consumer income will:

increase equilibrium price and quantity if the product is a normal good

The quantity of a good demanded increases when its price falls is that the

lower price increases the real income of buyers, enabling them to buy more

¨Because of unseasonably cold weather ,the supply of oranges has substantially decreased."This statement indicates that

the amount of oranges that will be available at various prices has declined

There will be a surplus of a product when:

consumers want to buy less than producers offer for sale.

An increase in the price of a product will reduce the amount of it purchased because

consumers will substitute other products for the one whose price has risen

A market is in equilibrium:

if the amount producers want to sell is equal to the amount consumers want to buy.

The demand curve shows the relationship between

price and quantity demanded

The law of demand states that

price and quantity demanded are inversely related

The supply curve shows the relationship between:

price and quantity supplied

increase in quantity demanded

price has declined and consumers therefore want to purchase more of the product

If the price of K declines, the demand curve for the complementary product J will:

shift to the right

A leftward shift of a product supply curve might be caused by:

some firms leaving an industry

At the equilibrium price :

there are no pressures on price to either rise or fall.

The Substitution effect

When product prices change ,consumers are inclined to purchase larger amounts of the now cheaper products and less of the now more expensive products

If the demand curve for product B shifts to the right as the price of product A declines, then:

A and B are complementary goods

Assume that the demand schedule for product C is downsloping. If the price of C falls from $2.00 to $1.75:

A larger quantity of C will be demanded

Assuming competitive markets with typical supply and demand curves, which of the following statements is correct?

An increase in demand with no change in supply will result in an increase in sales

A recent found that an increase in the price of peanut butter would reduce the demand for jelly

They are complementary goods

The Income Effect

When the price of a product increases, a consumer is able to buy less of it with a given money income

In 2000 the price of oil rose dramatically ,which in turn caused the price of natural gas to increase . This can best be explained by saying that oil and gas are

Substitute goods , the higher price of oil increased the demand for natural gas

Which of the following will NOT cause the demand for product K to change ?

a change in price

What will the cause demand curve for Product A to shift to the left

an increase in money income if A is an inferior good

An economist for a bicycle company predicts that, other things equal, a rise in consumer incomes will increase the demand for bicycles. This prediction is based on the assumption that

bicycles are normal goods

A shift to the right in the demand curve for product A can be most reasonably explained by saying that:

consumer preferences have changed in favor of A do that they now want to buy more at each possible price

Assume in a competitive market that price is initially above the equilibrium level. We can predict that price will:

decrease,quantity demanded will increase and quantity supplied will decrease

Ticket scalping implies that

event sponsors have established ticket prices at below-equilibrium levels.

With a downsloping demand curve and an upsloping supply curve for a product, placing an excise tax on this product will :

increase equilibrium price and decrease equilibrium quantity

Given a downsloping demand curve and an upsloping supply curve for a product, an increase in the price of a substitute good will:

increase equilibrium price and quantity

Other things equal, the provision of a per unit subsidy for a product will :

increase its supply

Assume product A is an input in the production of product B. In turn product B is a complement to product C. We can expect a decrease in the price of A to:

increase the supply of B and increase the demand for C

One can say with certainty that equilibrium price will decline when supply:

increases and demand decreases

If the supply and demand curves for a product both decrease, then equilibrium:

quantity must decline,but equilibrium price may either rise, fall ,or remain unchanged

Quantity demanded

refers to a specific amount that will be demanded per unit of time at a specific price, other things constant

The law of supply

reflects the amount that producers will want to offer at each price in a series of prices

Assume a drought in the Great Plains reduces the supply of wheat. Noting that wheat is a basic ingredient in the production of bread and potatoes are a consumer substitute for bread, we would expect the price of wheat to:

rise,the supply of bread to decrease and the demand fir tortillas to increase

If price is above the equilibrium level, competition among sellers to reduce the resulting:

surplus will increase quantity demanded and decreased quantity supplied

In moving along a stable supply curve which of the following is not held constant?

the price of the product for which the demand curve is relevant