SUPPLY & DEMAND

1. If the price of a good increases,

• a. consumers will demand a lower quantity • b. supply will increase • c. supply will decrease • d. demand will decrease • e. producers will supply a lower quantity

2. The relationship between price and quantity demanded is graphically illustrated by the

• a. demand curve • b. demand table • c. demand schedule • d. demand graph • e. demand chart

3. A table showing the relationship between the price of a good and quantity supplied is called a• a. supply table • b. supply curve • c. supply graph • d. supply chart • e. supply schedule

4. The law of supply states that the relationship between price and quantity supplied is• a. categorical • b. direct • c. converse • d. indirect • e. inverse

5. The law of demand states that the relationship between price and quantity demanded is• a. categorical • b. inverse • c. indirect • d. converse • e. direct

6. An increase in demand is represented by a(n)• a. movement down the demand curve • b. movement up the demand curve • c. increase in the slope of the demand curve • d. rightward shift of the demand curve • e. leftward shift of the demand curve

7. A decrease in the price of inputs will cause• a. movement along the supply curve • b. the supply curve to shift right • c. the demand curve to shift left • d. the supply curve to shift left • e. the demand curve to shift right

8. An increase in the price of a complement good will cause• a. movement along the demand curve • b. the demand curve to shift left • c. the supply curve to shift right • d. the supply curve to shift left • e. the demand curve to shift right

9. An increase in the price of a substitute good will cause• a. the supply curve to shift left • b. movement along the demand curve • c. the demand curve to shift left • d. the supply curve to shift right • e. the demand curve to shift right

10. An increase in the number of buyers will cause• a. the supply curve to shift left • b. the demand curve to shift right • c. the supply curve to shift right • d. movement along the demand curve • e. the demand curve to shift left

11. An increase in the rate of interest paid to capital causes• a. the supply curve to shift left • b. the supply curve to shift right • c. the demand curve to shift right • d. movement along the supply curve • e. the demand curve to shift left

12. An increase in price will cause

• a. the demand curve to shift right • b. the supply curve to shift right • c. the demand curve to shift left • d. the supply curve to shift left • e. movement along the supply curve

13. An increase in supply will

• a. decrease price and quantity • b. have no effect on market equilibrium • c. increase price and quantity • d. decrease price and increase quantity • e. increase price and decrease quantity

14. A decrease in demand will

• a. increase price and quantity • b. decrease price and quantity • c. decrease price and increase quantity • d. have no effect on market equilibrium • e. increase price and decrease quantity

15. A war with Iran shuts down oil shipments from the Middle East. In the market for oil,• a. price decreases and quantity increases • b. the equilibrium is unaffected • c. price and quantity increase • d. price increases and quantity decreases • e. price and quantity decrease

16. In the market for tangerines, an increase in the price of oranges will• a. increase price and decrease quantity • b. have no effect on market equilibrium • c. decrease price and quantity • d. increase price and quantity • e. decrease price and increase quantity

17. Researchers develop a new breed of cow that greatly increases milk production. In the market for ice cream,• a. price decreases and quantity increases • b. price increases and quantity decreases • c. price and quantity decrease • d. price and quantity increase • e. the equilibrium is unaffected

18. In the market for tennis balls, a decrease in the price of tennis rackets will• a. have no effect on market equilibrium • b. increase price and quantity • c. decrease price and increase quantity • d. decrease price and quantity • e. increase price and decrease quantity

19. A new study links consumption of apples to decreased risk of heart disease. In the market for apples,

• a. the equilibrium is unaffected • b. price and quantity increase • c. price and quantity decrease • d. price increases and quantity decreases • e. price decreases and quantity increases

20. In the market for chocolate bars, a decrease in the price of cacao beans will• a. decrease price and quantity • b. increase price and decrease quantity • c. decrease price and increase quantity • d. have no effect on market equilibrium • e. increase price and quantity