Unit 2: Supply / Demand Practice Problems - St. Johns County School ...

Unit 2: Supply / Demand Practice Problems

Multiple Choice Identify the choice that best completes the statement or answers the question.

1. Which of the following factors cause a movement along the demand curve? a. change in the prices of related goods b. change in the price of the good c. change in the population d. both a change in the price of the good and a change in the population e. change in the popularity of the good

2. If goods A and B are substitutes, a decrease in the price of good B will: a. increase the demand for good A. b. increase the demand for good B. c. decrease the demand for good A. d. increase the demand for good B and decrease the demand for good A. e. increase the quantity of good B demanded and increase the demand for good A.

3. A newspaper story recently reported that the price of new cars has decreased, and the quantity of new cars sold has dropped. The price and quantity changes were probably caused by: a. a decrease in buyers' incomes and new cars are normal goods. b. an increase in buyers' incomes and new cars are normal goods. c. an increase in production costs. d. a decrease in production costs. e. the price of gasoline has decreased

4. A good is inferior if: a. when income increases, the demand remains unchanged. b. when income increases, the demand decreases. c. when income increases, the demand increases. d. income and the demand are unrelated. e. when income decreases, the demand decreases.

Figure 5-1: Demand for Coconuts

5. (Figure 5-1: Demand for Coconuts) If a coconut is a normal good and the price of coconuts increases, then the movement that would take place in the model could be:

a. A to B. b. B to E. c. C to A. d. E to B. e. B to A.

6. (Figure 5-1: Demand for Coconuts) If coconuts are considered a normal good and the overall income level of consumers is falling, then the movement that would take place in the model could be: a. A to C. b. B to A. c. C to A. d. E to B. e. A to B.

7. A decrease in the price of a good will result in: a. an increase in demand. b. an increase in supply. c. an increase in the quantity demanded. d. more being supplied. e. a rightward shift of the demand curve.

8. If people demand more of product A when the price of B falls, then A and B are: a. not related. b. substitutes. c. complements. d. inferior goods. e. capital goods.

9. Economists know that a particular good can be classified as an inferior good if a(n) ________ in buyers' income causes a(n) ________. a. increase; increase in demand b. increase; decrease in quantity demanded c. increase; decrease in demand d. decrease; decrease in demand e. increase; increase in supply

10. Which of the following best describes the law of demand? a. As income taxes rise, fewer new cars are purchased. b. As the price of corn rises, more acres of corn are planted. c. As the price of a DVD rental rises, fewer DVDs are rented. d. As the population rises, more electricity is consumed. e. As the price of gasoline rises, fewer large SUVs are purchased.

11. An inverse relationship between price and quantity is represented by: a. the demand curve. b. the supply curve. c. the production possibility frontier. d. equilibrium. e. the marginal cost curve.

12. What would happen in the market for canned pinto beans if your income increases? a. Demand increases if pinto beans are an inferior good. b. Demand increases if pinto beans are a normal good.

c. Supply increases if pinto beans are an inferior good. d. Supply increases if pinto beans are a normal good. e. Quantity demand increases if pinto beans are an inferior good.

13. The demand for a good will increase if: a. there is a decrease in the price of the good. b. the price of inputs needed in the production of the good decrease. c. there is an increase in the number of sellers in this market. d. the price of a complementary good increases. e. there is an increase in the number of consumers in this market.

14. A market is composed of three individuals, Nicholas, Benjamin, and Alexander. Their individual demand

schedules are given below and are as follows:

Nicholas

Benjamin

Alexander

Price

Quantity

Price

Quantity

Price

Quantity

Demanded

Demanded

Demanded

1

10

1

15

1

12

2

9

2

11

2

10

3

8

3

9

3

8

Based on this information, which of the following market demand schedules accurately portrays this market?

a. Price Quantity Demanded

1

27

2

35

3

30

b. Price Quantity Demanded

1

20

2

5

3

25

c. Price Quantity Demanded

1

37

2

30

2

25

d. Price Quantity Demanded

1

25

2

30

3

10

e. Price Quantity Demanded

1

35

2

25

3

25

15. The horizontal summation of individual demand curves for a particular product, holding the quantity demanded constant, is referred to as: a. market demand. b. market supply. c. complements in production. d. substitutes in production. e. total production possibilities

16. A decrease in the price of eggs will result in a(n):

a. increase in the demand for eggs. b. increase in the supply of eggs. c. decrease in the supply of eggs. d. downward movement along the supply curve of eggs. e. decrease in the demand for eggs.

17. When the price of lamps increases, the: a. supply increases. b. quantity supplied increases. c. supply decreases. d. quantity supplied decreases. e. quantity demanded increases.

18. The typical supply curve illustrates that: a. other things equal, the quantity supplied of a good is inversely related to the price of a good. b. other things equal, the supply of the good creates its own demand for the good. c. other things equal, the quantity supplied of a good is positively related to the price of a good. d. price and quantity supplied are unrelated as the supply curve is vertical. e. other things equal, the supply curve is horizontal.

19. Over the past few years the technology associated with producing flat-panel televisions has improved. This has led to a(n) ________ in ________ flat-panel televisions. a. increase; the supply of b. increase; the demand for c. decrease; the supply of d. decrease; the quantity supplied of e. decrease; the demand for

20. A technological advance in the production of automobiles will: a. increase the demand for automobiles. b. increase the supply of automobiles. c. decrease the demand for automobiles. d. decrease the supply of automobiles. e. have no effect on the demand or supply of automobiles.

Figure 6-1: Supply of Coconuts

21. (Figure 6-1: Supply of Coconuts) If the price of coconuts decreases, then the movement that would take place in the model could be: a. A to C. b. B to A. c. C to A. d. E to B. e. A to B.

22. (Figure 6-1: Supply of Coconuts) If the prices of inputs (e.g., labor, fertilizer, and fuel) used to produce and transport coconuts are increasing, then the movement in the model could be: a. A to B. b. B to A. c. C to A. d. E to B. e. B to C

23. (Figure 6-1: Supply of Coconuts) If the prices of inputs (e.g., labor, fertilizer, and fuel) used to produce and transport coconuts are decreasing, then the movement in the model could be: a. A to B. b. B to A. c. C to A. d. E to B. e. B to E

24. (Figure 6-1: Supply of Coconuts) If there is an improvement in the technology used to harvest coconuts (e.g., a faster, less expensive coconut picker), then the movement in the model could be: a. A to C. b. B to A. c. C to A. d. B to E. e. A to B

25. (Figure 6-1: Supply of Coconuts) If there is an expectation on the part of coconut suppliers that the price of coconuts will be significantly higher in the very near future, then the movement in the model to reflect today's market behavior would be: a. A to B. b. B to A. c. A to C. d. B to E. e. E to B

26. A decrease in supply means: a. a shift to the left of the entire supply curve. b. moving downward (to the left) along the supply curve with lower prices. c. less will be demanded at every price. d. more will be supplied at every price. e. a shift to the left of the entire demand curve.

27. If the price of a commodity increases, you would expect the: a. supply curve to shift to the left. b. quantity supplied to increase.

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