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Demand & Supply
Demand & Supply
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Review of basic demand and supply concepts.
Flashcards
24 cards
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Practice quiz
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Questions
24
Answers
1
If a firm expects the price of their goods to increase in the future, then it will
decrease the current supply.
increase the current supply.
change what it produces.
seek a patent for its products.
2
The ________ motivates businesses to produce goods and services
customer happiness
government taxation
profit incentive
revenue incentive
3
If the price of Good A increases and the demand for Good B increases then they are considered
complementary goods.
inferior goods.
normal goods.
substitute goods.
4
Which of the following statements about implementing price controls is NOT correct?
They can lead to a more efficient outcome in the market.
Binding price ceilings cause a shortage in the market.
The govt uses them if it thinks the market outcome is unfair
Binding price floors cause a surplus in the market
5
Which of the following will NOT cause a change in the demand for a particular good?
a change in the price of a substitute good
a change the price of the good
income level of consumers
an increase in the number of consumers
6
If good X and good Y both satisfy the same need or want then they are
substitute goods.
inferior goods.
normal goods.
complementary goods.
7
The market demand curve for a good is
the sum of all individual supply curves for the good.
influenced by the producers of the good.
the sum of all individual demand curves for the good.
determined by the government.
8
If the government wants to increase the amount of a good that is produced, it will
pass a law requiring the firms to produce the good.
place a tariff on the import of the good.
give producers of the good a subsidy.
apply an excise tax to the sale of the good.
9
Which of the following is the correct formula for calculating profit?
profit = marginal revenue - marginal cost
profit = total revenue
profit = total revenue - total cost
profit = marginal revenue - variable costs
10
What usually occurs when new technology is applied to the production of a good?
the demand for the good increases
the supply of the good decreases
the supply of the good increases
the government will intervene to maintain competition
11
Diminishing marginal utility means that each additional unit of a good consumed will have
not change the total of consuming the good.
decrease the total benefit of consuming the good.
the same additional benefit as the previous unit.
less additional benefit than the previous unit.
12
The additional revenue that a business earns from selling one more unit of a good
profit
marginal cost
marginal revenue
total revenue
13
A table that shows all of the possible quantities demanded at different prices is a
demand chart.
demand curve.
demand schedule.
demand chart.
14
Which of the following statements about demand curves is NOT correct?
It illustrates the inverse relationship between P and QD.
It slopes upward from left to right.
It is a graphic representation of a demand schedule.
15
According to the law of demand, if the price of a good increases, then
supply will increase.
demand will decrease.
quantity demanded will decrease.
quantity supplied will decrease
16
All of the following statements about market equilibrium are correct EXCEPT
there is not a shortage or a surplus.
it is not affected by changes in demand or supply.
quantity demanded is equal to quantity supplied.
the outcome is very efficient.
17
You expect the price of gasoline to increase tomorrow, so fill up today. This is an example of
the income effect.
government regulation.
market size.
consumer expectations.
18
A supply curve
is a graphic representation of a supply schedule.
slope upward from left to right.
all of the above are correct.
has a positive slope.
19
If your income increases and you buy less ramen noodles, then ramen noodles are
complementary goods.
normal goods.
substitute goods.
inferior goods.
20
The economic principle that "other things being equal" or "all else remains the same" is called
ceteris parabis.
E pluribus unum.
writ of mandamus
cinco de mayo
21
A business maximizes its profit when it produces the the quantity where
marginal revenue is the greatest.
marginal cost is the lowest.
total revenue is the highest.
marginal revenue equals marginal cost.
22
Which is the best example of the law of supply
A citrus farmer doubles his land
A restaurant purchases a new oven
Perdue Chicken opens a new factory
A pizzeria increases slices as price increases
23
If firms charge a price that is higher than the equilibrium price
it will create a shortage.
the government will have to get involved.
it will create a surplus.
it will be more efficient than the equilibrium.
24
The federal minimum wage is an example of
a price ceiling.
an externality.
a price floor.
a quota.
