Demand and Supply
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1. According to the "Law of Demand," as the price of a good increases
a. the demand for the good increases.
b. the demand for the good decreases.
c. the quantity demanded increases.
d. the quantity demanded decreases.
2. Tea and Coffee are ____________. Peanut butter and jelly are ____________.
a. complements; substitutes
b. complements; complements
c. substitutes; complements
d. substitutes; substitutes
3. Which of the following will increase the demand for pencils?
a. a decrease in the price
b. a decrease in the student population
c. a decrease in the price of pens
d. a decrease in the price of erasers
4. The ____________ supply curve is steeper than the ____________ supply curve.
a. long run; market day
b. short run; market day
c. short run; long run
d. all of the above
e. none of the above
5. The equilibrium price of oranges is
a. the price determined by the intersection of the supply and demand curves for oranges.
b. the price at which the quantity of oranges demanded at the given price equals the quantity supplied.
c. the price at which there is no excess supply or excess demand.
d. all of the above
e. none of the above
6. Which of the following can cause an increase in the supply of computers?
a. a technological improvement which increases the operating speed of computers
b. a decrease in the price of silicon computer chips
c. a decrease in the number of firms manufacturing computers
d. an increase in the price of the other goods those suppliers could produce
e. none of the above
7. This year, leather jackets are very popular. If they are less popular next year,
a. the quantity demanded of leather jackets will increase.
b. the demand for leather jackets will increase.
c. the quantity demanded of leather jackets will decrease.
d. the demand for leather jackets will decrease.
8. Suppose firms continue to sell the same number of leather jackets next year, what will happen to the market price? (Hint: Draw the picture!)
a. It will increase.
b. It will decrease.
c. It will stay the same.
d. We do not know enough to say anything about price.
9. If manufactures realize that leather jackets are less popular and cut production, what will happen to the market price? (Hint: Draw the picture!)
a. It will increase.
b. It will decrease.
c. It will stay the same.
d. We do not know enough to say anything about price.
10. In the figure below, demand shifts from D to D' while supply shifts from S to S', so
a. the increase in demand is larger than the increase in supply.
b. Equilibrium quantity decreases.
c. Equilibrium price decreases.
d. all of the above
e. none of the above
11. In the figure below, demand shifts from D to D' while supply shifts from S to S', so
a. the increase in demand is larger than the increase in supply.
b. equilibrium quantity decreases.
c. equilibrium price decreases.
d. all of the above
e. none of the above
12. Scientists discover that eating chocolate prevents cancer. Which of the following will occur?
a. The demand for chocolate increases.
b. The demand for chocolate decreases.
c. The quantity of chocolate demanded decreases.
d. The quantity of chocolate demanded increases.
13. Unfortunately, there is a disease in Brazil which destroys the cacao crop. (Cacao is used to make chocolate.) In this situation,
a. the supply of chocolate increases.
b. the supply of chocolate decreases.
c. the quantity of chocolate supplied increases.
d. the quantity of chocolate supplied decreases.
14. Because of the events in Questions 12 and 13, the equilibrium price of chocolate _____________. (HINT: Draw the picture!)
a. increases
b. decreases
c. We can't say anything about the equilibrium price of chocolate.
15. Because of the events in Questions 12 and 13, the equilibrium quantity of chocolate _____________. (HINT: Draw the picture!)
a. increases
b. decreases
c. We can't say anything about the equilibrium quantity of chocolate.
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