What is the principle of the law of supply?

The higher the price, the larger the quantity produced

What will happen in the rice market if buyers are expecting higher prices in the near future?

The demand for rice will increase now.

Given that COKE and PEPSI are substitute goods, if the price of COKE increases, there would be:

an increase in the demand for Pepsi.

If a good is "normal," then an increase in income will result in

an increase in the demand for the good.

What effect does a rise in the cost of machinery or raw materials have on the cost of a good?

The good becomes more expensive to produce

A market supply curve shows

the quantity supplied by producers at different prices

An announcement that smoking will harm your ability to think clearly will most likely result in:

a decrease in the demand for cigarettes.

A technological advancement

will shift the supply curve to the right.

What could cause this leftward shift of the supply curve for automobiles?

an increase in the price of steel

How can population changes affect demand for certain goods?

increase in the population will cause more to be purchased at every price

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CP ECON Demand & Supply PT I

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Demand, Supply,

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Questions 25

Answers

1
This shift could be caused by an:
Expectation of higher future prices
Decrease in number of sellers
More Expensive Resources
An improvement in technology
2
The higher gasoline prices below would be caused by:
more sellers
government subsidies
new technology
More expensive oil
3
What is the principle of the law of supply?
The lower the price, the larger the quantity produced.
The higher the price, the smaller the quantity produced
The lower the price, the more manufacturers will produce the good.
The higher the price, the larger the quantity produced
4
When any effort by government causes the supply of a good to rise, what happens to the supply curve for that good?
It shifts to the right.
The supply curve is not affected
It shifts to the left.
It reverses direction.
5
As a result of this shift Price ___ and Quantity ___.
Decreases / Increases
Increases / Decreases
Decreases / Decreases
Increases / Increases
6
What will happen in the rice market if buyers are expecting higher prices in the near future?
The demand for rice will be unaffected.
The demand for rice will increase now.
The supply of rice will increase now
The demand for rice will decrease now.
7
Given that COKE and PEPSI are substitute goods, if the price of COKE increases, there would be:
an increase in the quantity demanded of Pepsi.
an increase in the demand for Pepsi.
an increase in the supply of Pepsi.
a decrease in the demand for Pepsi.
8
If a good is "normal," then an increase in income will result in
an increase in the demand for the good.
an increase in price
no change in the demand for the good.
a decrease in the demand for the good.
9
What effect does a rise in the cost of machinery or raw materials have on the cost of a good?
The good becomes cheaper to produce.
The good becomes more expensive to produce
It does not have any effect on the cost of the good
A rise in the cost of raw materials (but not machinery) raises the cost.
10
A market supply curve shows
supply for any set of conditions
how the supply of goods is kept in balance.
the quantity supplied by producers at different prices
how prices affect the cost of raw materials
11
An announcement that smoking will harm your ability to think clearly will most likely result in:
a decrease in the demand for cigarettes.
no change in smoking habits.
an increase in the price of cigarettes.
an increase in the quantity of cigarettes demanded.
12
If prices rise and income stays the same, what is the effect on demand?
Fewer goods are bought.
Demand stays the same.
More goods are bought.
More is bought of some goods and less of others.
13
As a result of this shift, Price ___ and Quantity ___.
Decreases / Decreases
Increases / Decreases
Increases / Increases
Decreases / Increases
14
What could cause the movement from point A to B?
an increase in demand
an increase in price
a decrease in demand
a decrease in price
15
If the price is expected to increase later, many producers will sell or supply _____ now
more
less
16
When the price of a good rises, the quantity supplied of the good also rises. This is
the law of diminishing returns.
the law of supply.
the law of demand.
the law of increasing costs.
17
The movement from point A to point B on the graph would be caused by
a decrease in the price of a substitute good.
an increase in income.
a decrease in price.
an increase in price.
18
A technological advancement
will shift the supply curve to the left.
will shift the demand curve to the right.
will shift the supply curve to the right.
will shift the demand curve to the left.
19
What do economists call a situation in which consumers buy a different quantity than they did before, at every price?
a change in demand
a change in expectations
a change in quantity demanded
a shift in size of the demand curve
20
Which of the following is NOT a demand shifter?
price of resources
income
number of buyers
expectation of future prices
21
What could cause this leftward shift of the supply curve for automobiles?
an increase in the number of auto factories
an increase in government subsidies
the expectation of lower prices later
an increase in the price of steel
22
How can population changes affect demand for certain goods?
increase in the population will cause more to be purchased at every price
Babies and old people need /buy different goods
Different levels of demand will cause different prices.
Demand will exceed supply under some population conditions
23
In the market for Ice Cream, what could cause this shift?
an increase in the population
the expectation that ice cream will be cheaper later
an increase in price
an decrease in the price of sherbert
24
At a price of $2.00 in this market a ___ would exist and prices would tend to ___.
Shortage / Rise
Shortage / Fall
Surplus / Rise
Surplus / Fall
25
On a demand curve, an decrease in price causes a
a decrease in demand (right shift)
an decrease in quantity demanded
an increase in demand (right shift)
increase in quantity demanded

CP ECON Demand & Supply PT I Flashcards | StudBud