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Supply and Demand Exam

Supply and Demand Exam Answer Key

1. 
The desire to own something and the ability to pay for it.
  1. supply
  2. demand
  3. income
  4. payment
2. 
According to the law of demand, when prices increase, demand will decrease.
  1. True
  2. False
3. 
Which method would be most appropriate for constructing a demand schedule?
  1. polling consumers
  2. polling wholesalers
  3. polling producers
  4. interviewing entrepreneurs
4. 
Given the following information create a market demand schedule:

Price of candy: $.50
Quantity oat this price: 200

There should be at least 3 additional prices and quantities.
5. 
What does elasticity of demand measure?
  1. a decrease in the quantity demanded
  2. an increase in the quantity available
  3. how buyers will cut back or increase their demand when price rises or falls
  4. the amount of time consumers need to change their demand for a good
6. 
An inelastic demand curve
  1. is almost vertical
  2. is circular
  3. is almost horizontal
  4. cannot be illustrated on a graph
7. 
Many consumers will continue to buy home heating oil even if the price increases. In economic terms, this represents
  1. flexible demand
  2. inflexible demand
  3. elastic demand
  4. inelastic demand
8. 
In order to graph a change in demand, how many demand curves are necessary (at least)?
  1. 1
  2. 2
  3. 3
  4. 4
9. 
When the demand for a product decreases due to changing consumer preferences, the demand curve
  1. shifts to the left
  2. shifts to the right
  3. remains constant
  4. goes upward
10. 
When demand increases, the demand curve
  1. shifts to the left
  2. shifts to the right
  3. becomes smooth
  4. becomes steep
11. 
How can the demand for one good be affected by increased demand of another one?
  1. when goods are bought together, increased demand for one will decrease demand for the other.
  2. if goods are used together, increased demand for one will increase demand for the other.
  3. if goods are substitutes for each other, increased demand for one will increase demand for the other.
  4. a drop in price for a good will increase demand for the good and its substitute.
12. 
Goods used in place of one another.
  1. inferior goods
  2. compliments
  3. substitutes
  4. normal goods
13. 
An Xbox and an Xbox controller case are examples of
  1. Demographics
  2. Substitutes
  3. Inelasticity
  4. Complements
14. 
Supply is the desire and ability to produce and sell a product.
15. 
The following is an example of a ____________________.

Price quantity
$.50 100
$1.00 150
$1.50 200
$2.00 250
  1. supply schedule
  2. market demand schedule
  3. market supply schedule
  4. demand schedule
16. 
Which statement best illustrates the law of supply?
  1. Declining demand for automobiles leads automobile makers to increase production
  2. Declining automobiles prices leads automobile makers to reduce production
  3. Increasing labor productivity leads automobile makers to decrease production
  4. Increasing variable costs leads automobile makers to increase production
17. 
What does supply refer to?
  1. amount of goods sold
  2. amount of good that is produced
  3. human desire
  4. noe of the above
18. 
In the case of supply, as price increases
  1. the quantity supplied decreases
  2. the quantity supplied increases
  3. the quantity supplied stays the same
  4. the quantity supplied decreases then increases
19. 
A decrease in supply shifts the supply curve
  1. to the right
  2. to the left
  3. to the center
  4. upward
20. 
Which of the following could cause a change in supply?
  1. Prices of substitutes
  2. changes in income
  3. increased efficiency
  4. consumer tastes and preferences
21. 
If the costs of producing a particular product increase, the supply is likely to
  1. Increase greatly
  2. Increase slightly
  3. decrease
  4. remain the same
22. 
Which of the following developments would most likely cause the supply curve for jeans to shift to the left?
  1. decreased interest rates
  2. increased labor productivity
  3. increased cotton prices
  4. decreased taxes
23. 
                     is a measure of how responsive producers are to price changes in the marketplace.
  1. Elasticity of Demand
  2. Elasticity of Supply
  3. Market Equilibrium
  4. Shortage
24. 
Prices will rise when:
  1. Demand drops
  2. There is a shortage
  3. There is a surplus
  4. They go down
25. 
This is when there is more supply than demand.
  1. Equilibrium
  2. Price ceiling
  3. Shortage
  4. Surplus
26. 
The point where the demand curve and the supply curve intersect is called the point of:
  1. disequilibrium
  2. excess supply
  3. excess demand
  4. equilibrium
27. 
The equilibrium price is always determined by the
  1. government
  2. buyers
  3. sellers
  4. buyers and sellers together
28. 
You go to the store to buy bread and there is not enough bread for all those who want to purchase it, what is this an example of?
  1. excess supply
  2. excess equilibrium
  3. shortage
  4. surplus
29. 
Which development would tend to increase the equilibrium price for apartment rentals?
  1. decreased availability of apartments
  2. increased supply of building materials
  3. surplus of mobile homes
  4. decreased demand for undeveloped land
30. 
Draw a sample supply and demand on the graph below and circle the equilibrium point. (Make sure you label each curve!)
Graph 20x20 Quadrant 1
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