The law of demand says

The lower the price, the more consumers will buy.

According to the law of supply

The higher the price the larger the quantityproduced

When price controls are placed on markets

Surpluses and shortages are created.

A government payment to support a business or market.

Increase the quantity of demand for a good.

In a market economy goods and services are allocated by the government

False, they are allocated through prices.

A market is in equilibrium when

Quantity supplied and quantity demanded are equal.

If half of Gilbert moves away, what happens to the price and quantity ofgoods and services?

Lower prices and lower quantity

Which statement explains why prices rise in a market?

There is excess demand in the market.

When does a surplus exist?

When supply is greater than demand

Which of the following statements is NOT true?

Prices are determined only by suppliers.

If sellers expect the price of a good to rise in the future, they will

Store goods now and sell more in the future

A demand curve illustrates

The quantities demanded at each price by consumers.

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Supply and Demand

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Questions 25

Answers

1
A tariff is?
A tax on imported goods
A quota
A tax on beer
Always necessary
2
The law of demand says
The lower the price, the less consumers will buy.
The lower the price, the more consumers will substitute.
The higher the price, the more consumers will buy.
The lower the price, the more consumers will buy.
3
An anti price gouging law will increase supply of goods for poor people following a disaster
Generators
Only in Florida
False
True
4
According to the law of supply
If the price of a good rises firms will produce less.
If the price of a good falls firms may enter the market
The lower the price the larger the quantity consumed.
The higher the price the larger the quantityproduced
5
The minimum wage is an example of
A price floor
A price shortage
A price ceiling
A price substitution
6
Non-price determinants of demand include
Production costs.
Competition among suppliers
Price and opportunity cost.
Consumer taste and income.
7
For normal goods, a rise in people’s income means there will be
An increase in demand.
A decrease in demand.
A substitution effect.
A rise in prices.
8
When price controls are placed on markets
Consumers pay more than is necessary.
Producers make excessive profits.
Surpluses and shortages are minimized.
Surpluses and shortages are created.
9
Which of the following is NOT an example of complements?
Skis and ski boots
DVD player and DVD disks
Chicken wings and buffalo wing sauce.
Coffee and Diet Pepsi.
10
A subsidy is
Illustrated by the market supply curve
A tax on the production or sale of a good.
A form of government regulation
A government payment to support a business or market.
11
A drop in price will
Not affect the law of demand
Not affect the demand for goods.
Decrease the quantity of demand for a good.
Increase the quantity of demand for a good.
12
Any factor that increases production costs decreases.
Supply
Demand.
Advertising
Revenue
13
If you keep buying despite a price increase,your demand is
Elastic
Inelastic
Normal
Strong
14
When is there a shortage?
We no longer have shortages
When things are scarce
When supply is greater than demand
When demand outstrips supply
15
In a market economy goods and services are allocated by the government
I think so...
Of course!
True
False, they are allocated through prices.
16
How are goods and resources distributed in a free market economy?
Through Dumb luck
Through prices
Through providence
Through government action
17
A market is in equilibrium when
Quantity demanded is greater than quantity supplied.
Quantity supplied and quantity demanded are equal.
Quantity supplied is greater than quantity demanded.
Government takes action to bring it into equilibrium.
18
If half of Gilbert moves away, what happens to the price and quantity ofgoods and services?
Higher prices and higher quantity
Lower prices and lower quantity
Lower prices and higher quantity
Higherprices and lower quantity
19
Which statement explains why prices rise in a market?
Consumers buy less of a good than in previous years.
New producers enter the market.
Producers produce more than consumers want to buy.
There is excess demand in the market.
20
When does a surplus exist?
When supply is greater than demand
When demand is greater than supply
When there are new products for sale
When prices drop
21
Which of the following statements is NOT true?
Low prices discourage production
Minimum wage laws might hurt poor unskilled workers
Prices are determined only by suppliers.
High prices discourage consumption.
22
If sellers expect the price of a good to rise in the future, they will
Raise their prices now.
Set prices according to the law of demand
Store goods now and sell more in the future
Put more goods on the market immediately.
23
A demand curve illustrates
The quantities demanded at each price by consumers.
The products which are most in demand.
The in priced charged by different stores.
The differences in demand for different products.
24
Which of the following businesses has inelastic supply?
A pizza parlor
A hair salon
A bagel shop
A citrus farm
25
Which of the following is an example of a good with inelastic demand?
Diet Pepsi
Life saving medicine
Che Guevara shirts
Burrito Supreme!

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