Microeconomics: Unit Two (Supply and Demand Practice Test and Topical Test) – Flashcards
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To the economist, the best meaning of the term demand is
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A schedule which shows the amounts of a product that consumers are willing and able to purchase at various prices
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A downsloping demand curve could be explained by what three things?
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diminishing marginal utility, the income effect, and the substitution effect
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A market demand curve can be derived by
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adding individual demand curve
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An increase in price would result in
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an increase in quantity supplied
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A normal good has what type of relationship between demand and income?
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direct
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To the economist, the best meaning of the term supply is
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a schedule which shows the amounts of a product that producers are willing and able to produce at various prices during a specific period of time.
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An inferior good has what type of relationship between demand and income?
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Inverse
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Two major events have occurred in the personal computer market: 1. micro-chip technology has lowered the cost of production and 2. more user-friendly software has become available. What type of effect will this have on equilibrium price and equilibrium quantity?
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Increase or decrease in Equilibrium Price, Increase in equilibrium quantity
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The demand schedule for a good shows:
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the specific quantity of the good that people are willing and able to buy at different prices
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If the price of coffee decreases, the demand curve for tea (a substitute good) will:
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a shift to the left
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Suppose a price ceiling is set by the government below the market equilibrium price. What will be the result?
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The quantity demanded will exceed the quantity supplied
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Travel by bus and pawn-shop services would be expected to be examples of:
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inferior goods
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A decrease in the number of dry cleaners in an area is represented by a/an:
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leftward shift in the dry cleaning supply curve
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"Because of unreasonable cold weather, much of the peach crop has been destroyed." This statement indicates that the:
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quantity of peaches that will be available at any given price has decreased.
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Substitute goods are goods that are:
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competing for consumer spending
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If the demand for a good increases when the prices of another good increases, then these goods are:
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substitute in consumption
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Seller A has an upward-sloping supply curve and is willing to supply 400 units of a commodity at a price of $5 per unit. Seller A is now willing to supply 500 units at a price of $5 per unit. Evidently, seller A has experienced a/an:
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increase in supply
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What event would increase the supply of tomatoes?
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A decrease in the cost of fertilizers for the tomato plants.
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Assume Q represents the quantity supplied at a given price and Qd represents the quantity demanded at the same given price. What market condition produces a downward movement of the price?
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Q = 1,000 Qd = 750
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Consumers buy less of a good as its price increases because
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substitute goods are now relatively cheaper
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A baby boom will have what immediate effect on the disposable diaper market?
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demand increases
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If the United Auto Workers union can obtain a substantial wage increase for auto workers, there will be a/an:
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decrease in the supply of automobiles, which is a shift to the left of the supply curve.
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Assuming DVDs and DVD players are complements, the effect of an increase in the price of DVD players on the market for a DVD is a/an:
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leftward shift in the demand curve for DVDs.
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If the current price of a good is the same as that found at the intersection of the market demand and supply curves, then:
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the market is in equilibrium
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A technological improvement in the production of good X causes the:
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supply curve for X to shift to the right
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If the supply of a good decreased, what would be the effect on the equilibrium price and quantity?
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Price would increase, quantity would decrease
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Which of the following is true if the price of coffee increases?
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The demand for tea, a substitute good, will increase.
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A side effect of a price floor set above the equilibrium price is:
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an excess supply of the good is created
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An increase in the demand for a good means that:
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consumers are willing to purchase more of the good at each possible price
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What is the closest to the definition of demand?
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People's willingness to buy goods and services at given prices.
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Consider the market for grapes. An increase in the wage paid to grape pickers will cause the:
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supply curve for grapes to shift to the left, resulting in a higher equilibrium price for grapes and a decrease in the quantity consumed.
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Assuming that automobiles are normal goods, a rise in consumer income, other things being equal, will cause:
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the demand curve for automobiles to shift to the right
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A movement along a demand curve is called a change in:
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quantity demanded
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A price ceiling that sets the price of a good below market equilibrium will cause:
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an increase in quantity demanded of the good, a decrease in quantity supplied of the good, and a shortage of the good.
