Eco 535 - Digital Economy » Winter 2022 » Wk 1 Practice Ch 3, Demand, Supply, and Market Equilibrium
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Question #1
A change in demand is represented by a ______ the demand curve while a change in quantity demanded is represented by a _______ the demand curve.
A.
shift of; movement along
B.
shift of; shift of
C.
movement along; movement along
D.
movement along; shift of
Question #2
All competitive markets involve which of the following?
A.
Supply, Price, Demand, Quantity
B.
Supply, Price, Government regulators
C.
Government regulators, Price, Demand, Quantity
D.
Supply, Government regulators, Price, Demand
Question #3
The concept of demand can be summarized by a schedule or curve showing the quantity of a product that would be ______.
A.
consumed at various possible prices
B.
subsidized at various possible prices
C.
given away at only one price
D.
produced at various possible prices
Question #4
The relationship between the price of a good or service and the quantity demanded of that good or service described by the law of demand is _____.
A.
negative
B.
positive
C.
equal
D.
direct
Question #5
A price at or above the price floor is illegal.
A.
True
B.
False
Question #6
A demand curve shows the ______.
A.
inverse relationship between price and quantity supplied for a product
B.
positive relationship between price and quantity demanded for a product
C.
positive relationship between price and quantity supplied for a product
D.
inverse relationship between price and quantity demanded for a product
Question #7
A ______ the demand curve represents a change in demand while a ______ the demand curve represents a change in the quantity demanded.
A.
movement along; shift of
B.
rotation of; movement along
C.
shift of; movement along
D.
rotation of; shift of
Question #8
Which of the following are the characteristics of a competitive market?
A.
A large number of buyers but a small number of sellers. A surplus of a narrow range of products
B.
A large number of buyers but a small number of sellers. Standardized products
C.
A large number of buyers and sellers. A surplus of a narrow range of products
D.
Standardized products. A large number of buyers and sellers.
Question #9
Which of the following specifically refers to demand?
A.
The buyer side of any market
B.
The seller side of any market
C.
Both the buyer and seller sides of any market
D.
The producer side of any market
Question #10
According to the law of demand, which of the following statements are true, all other things being equal?
A.
As price decreases, quantity demanded decreases. As price increases, quantity demanded increases.
B.
As price increases, quantity demanded decreases. As price decreases, quantity demanded increases.
C.
As price decreases, quantity demanded decreases. As price increases, quantity demanded increases.
Question #11
The inverse relationship between price and quantity demanded can be graphically illustrated by ______.
A.
a vertical line
B.
a horizontal line
C.
a downward sloping curve
D.
an upward sloping curve
Question #12
All the following are the determinants of demand except ______.
A.
price of substitutes in production
B.
consumers' incomes
C.
consumer tastes
D.
the prices of related goods
E.
consumer expectations
Question #13
Which of the following is likely to cause an increase in the demand for a good or service?
A.
An increase in the number of buyers
B.
An increase in the number of sellers
C.
An increase in the price of a complementary good
D.
An increase in income and the good is inferior
Question #14
Which of the following are determinants of demand?
A.
Prices of related goods, Corporate taxes and subsidies, Consumer expectations, Number of buyers, Resource prices
B.
Corporate taxes and subsidies, Consumer expectations, Number of buyers, Resource prices
C.
Corporate taxes and subsidies, Consumer expectations, Number of buyers, Resource prices, Consumer income
D.
Consumer tastes, Consumer expectations, Number of buyers, Consumer income, Prices of related goods
Question #15
A change in the number of buyers is a determinant of market ________
A.
equilibrium
B.
demand
C.
supply
Question #16
Market _____ is a schedule or curve showing the various amounts of a product that producers are willing and able to make available for sale at each possible price during a specific period.
A.
demand
B.
supply
C.
indicators
Question #17
According to the law of supply, price and quantity supplied have a(n) ______ relationship.
A.
negative
B.
direct
C.
inverse
D.
exponential
Question #18
The supply curve illustrates the relationship between ______.
A.
product and quantity supplied
B.
price and quantity supplied
C.
price and quantity demanded
D.
cost and price
Question #19
The supply curve measures quantity ______ on the horizontal axis and ______ on the vertical axis.
A.
price; supplied
B.
supplied; price
C.
demanded; price
D.
price; demanded
Question #20
Which of the following has the greatest effect on the quantity supplied?
A.
Positive technological changes
B.
Price
C.
Cost
D.
Tastes and preferences
Question #21
In general, a firm will (increase/decrease) the output of a good or service if the price of the good is rising.
A.
increase
B.
decrease
Question #22
When drawing a supply curve, _____ is labeled on the vertical axis.
A.
price
B.
cost
C.
quantity
D.
product
Question #23
Which of the following are determinants of supply?
A.
Taxes and subsidies, Consumer expectations, Resource prices
B.
Consumer expectations, Resource prices
C.
Taxes and subsidies, Technology, Resource prices
Question #24
If costs of production rise, the producer has an incentive to produce _____
A.
less
B.
more
Question #25
A change in ______, rather than a change in the quantity supplied, means a change in the schedule or a shift of the supply curve.
A.
supply
B.
demand
Question #26
What determines market price and equilibrium output in a market?
A.
Quantity demanded
B.
The interaction of buyers and sellers
C.
Quantity supplied
D.
Input prices
E.
The number of sellers in a market
Question #27
The determinants of the supply of a good are any factors other than the product's ______ that cause the supply curve of the good to shift.
A.
price
B.
cost
Question #28
Resource costs or changes in these costs to production are responsible for shifts in the supply curve.
A.
True
B.
False
Question #29
Choose all of the following that will cause a change in supply, not quantity supplied.
A.
Producer expectations, Technology, Number of sellers
B.
Product price, Number of sellers, Consumer expectations
C.
Product price, Producer expectations, Consumer expectations
Question #30
The interaction between buyers and sellers determines the equilibrium price and the _____ quantity.
A.
demanded
B.
equilibrium
C.
supplied
Question #31
What is the price where the intentions of buyers and sellers match?
A.
The inferior price
B.
The surplus price
C.
The equilibrium price
D.
The equilibrium quantity
Question #32
The rationing function of prices refers to the ability of the competitive forces of supply and demand to establish a price at which ______.
A.
buying and selling decisions are inconsistent
B.
buying and selling decisions are consistent
C.
selling, but not buying, decisions are consistent
D.
buying, but not selling, decisions are consistent
Question #33
On a simple supply model, a change in quantity supplied is illustrated by a ______ and a change in supply is illustrated by a ______.
A.
shift of the supply curve; movement along the supply curve
B.
movement along the supply curve; shift of the supply curve
C.
shift of the demand curve; shift of the supply curve
Question #34
The equilibrium price where the quantity demanded equals the quantity supplied is otherwise known as the _____ -clearing price.
A.
production
B.
selling
C.
market
Question #35
Competition among corn producers forces them to use the best technology and right mix of productive resources; otherwise their costs will be too high relative to the market price and they will be unprofitable. This is best described as ______.
A.
substitution in production
B.
the law of supply
C.
investment in physical capital goods
D.
energy efficiency
E.
productive efficiency
Question #36
The ability of the competitive forces of supply and demand to establish a price at which selling and buying decisions are consistent is called ______.
A.
equilibrium price
B.
equilibrium allocation
C.
perfect pricing
D.
the rationing function of prices
Question #37
A decrease in demand while holding supply constant results in ______ in both equilibrium price and quantity.
A.
no change
B.
an increase
C.
a decline
D.
a decline followed by an increase
Question #38
______,while holding demand constant, results in an increase in the equilibrium price of the good, but a decrease in the equilibrium quantity of the good.
A.
An unchanged supply of a good
B.
A rightward shift of the supply curve of a good
C.
A decrease in the supply of a good
D.
An increase in the supply of a good
Question #39
The production of a good or service in the least costly way is known as ______ efficiency.
A.
cost
B.
expenditure
C.
price
D.
productive
E.
allocative
Question #40
A decrease in supply while holding demand constant results in a(n) ______ in equilibrium price, and a(n) ______ in equilibrium quantity.
A.
decrease; decrease
B.
decrease; increase
C.
increase; increase
D.
increase; decrease
Question #41
Which of the following shows the effects on equilibrium price and quantity due to an increase in supply and a simultaneous decrease in demand?
A.
The change in equilibrium price is indeterminate and equilibrium quantity falls.
B.
Equilibrium price rises and the change in equilibrium quantity is indeterminate.
C.
Equilibrium price falls and the change in equilibrium quantity is indeterminate.
D.
The change in equilibrium price is indeterminate and equilibrium quantity rises.
Question #42
In which of the following situations do governments intervene to prevent prices from rising above or falling below their equilibrium levels?
A.
Prices are too low for firms. Prices are too high for consumers.
B.
Prices are too low for consumers. Prices are too high for firms.
C.
Prices are too low for consumers. Prices are too low for firms.
D.
Prices are too high for consumers. Prices are too high for firms.
Question #43
A price ceiling is the maximum legal price a seller may charge for a product or service where a price at or below the ceiling is ______ and a price above the price ceiling is ______.
A.
illegal; illegal
B.
legal; legal
C.
legal; illegal
D.
illegal; legal
Question #44
The effects on equilibrium price and quantity due to an increase in supply and a simultaneous decrease in demand are shown by _____.
A.
an indeterminate change in equilibrium price and an increase in equilibrium quantity
B.
an increase in equilibrium price and quantity
C.
a decrease in equilibrium price and an indeterminate change in equilibrium quantity
D.
an indeterminate change in equilibrium price and indeterminate change in equilibrium quantity
Question #45
A.
ceilings; above
B.
floor; greater
C.
floor; below
D.
ceilings; below
Question #46
Government may place legal limits on prices when it is determined that prices are unfairly _______ (high/low) for buyers or unfairly _______ (high/low) for sellers.
A.
low… low…
B.
high… low…
C.
high… high…
D.
low… high…
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