Download Test 2

Supply and Demand Exam
Name: ___________________
Multiple Choice: Choose the answer that best fits the question.
1. A _________ is a graph that shows the amount of a product that would be bought at all prices in
the market.
a) Supply curve
b) Demand curve
c) Supply Schedule
d) Law of Demand
2. Demand can only occur when a buyer is ________________________________.
a) limited by time
b) buying supplementary goods
c) willing and able to buy
d) determined to sell
3. Product A and Product B are compliments. What will happen to the demand for Product A if the
price of Product B goes down?
a) increases b) decreases c) stays the same
d) cannot be determined
4. How would a business owner in a market economy most likely react to high demand from
consumers for a scarce product?
a) by decreasing the supply of the product
b) by stopping sale of the product
c) by increasing the price of the product
d) by asking for government regulation
5. According to the law of supply. if price increases, supply _________________.
a) is not determined b) is elastic c) increases d) decreases
6. A _________ is a chart that shows the amount of a good or service that would be produced at
various prices in the market.
a) Demand curve
b) Supply Schedule
c) Demand Schedule
d) Law of Supply
7. If product A and Product B are substitutes. What will happen to the demand for product A if the
price of Product B goes up?
a) increases
b) decreases
c) stays the same
d) cannot be determined
Use the Graph to answer questions 10- 18.
10. What is point P called?
a) Vortex b) Equilibrium
c) Central Unit
d) Marginal Utility
11. At Point P, how many products will people buy?
a) 13 b) 50 c) 40 d) 15
12. Which line would become the new Demand if people move out of a violent area?
a) G b) D c) C d) F
13. What would the new market price be if Supply increases while Demand decreases?
a) 13 b) 50 c) 40 d) 17
14. Which point on the graph shows market price in a shortage?
a) M
b) N
c) P
d) B
15. Which line would become the new Supply if a business trains workers to do their jobs better?
a) G
b) C
c) D
d) F
16. Pens and pencils are substitutes. The price of pens goes down. Which line of the graph will show
the change in demand for pencils?
a) G
b) C
c) D
d) F
17. If the government promises a subsidy to producers of hybrid cars, which line on the graph will
show the change in supply of hybrid cars?
a) F
b) D
c) C
d) G
18. Which line would become the new Demand if people expect the price of milk to increase next
week?
a) G
b) C
c) F
d) D
19. What is a government payment to an individual or business in order to promote certain actions?
a) substitute
b) supplement
c) subsidy
d) surrogate
20. If quantity demanded is greater than quantity supplied there will be a _________________ of
goods.
a) Surplus b) Compliment c) Shortage d) Market
21. According to the law of Demand; if price increases, demand __________________.
a) Increases b) Decreases c) Remains unchanged d) Cannot be determined
22. If the cost of production goes down, supply will ______________.
a) Increase b) Decrease c) Remains unchanged
d) Cannot be determined
23. What impact will higher taxes have on supply?
a) cause supply to increase
b) cause supply to decrease
c) remains unchanged
d) cannot be determined
24. You open a lemonade stand and spend $50 on all supplies. You charge $0.25 per cup and sell $150
worth of lemonade. What was your cost of production?
a) $0.25
b) $50
c) $100
d) $150
25. Peanut butter and jelly are used together. What will happen to the demand for jelly if the price of
peanut butter decreases?
a) Increase b) Decrease
c) Stays the same
d) Cannot be determined
26. You open a lemonade stand and spend $50 on all supplies. You charge $0.25 per cup and sell $150
worth of lemonade. What was your market price?
a) $50
b) $100
c) $0.25
d) $150
27.
If two products are commonly used together they are considered ________________.
a) Elastic b) Compliments c) Inelastic d) Substitutes
28. When supply is greater than demand _______ occurs, which will cause price to ________.
a) surplus; go up
b) shortage; go up
c) surplus; go down
d) shortage; go down
29. Why would the government give a subsidy to a certain business?
a) to encourage production of their product
b) to discourage production of their product
c) to gain more money from the company’s sales
d) to try to control the economy
30. The most important motivation for a business is:
a) to create a good product
b) to make a profit
c) to be fair to their customers
d) to treat their workers well
31. When individual, private citizens own the businesses in an economy instead of the government,
that economy would be classified as:
a) Traditional
b) Command
c) Capitalist
d) Disclosed
32.
In a free enterprise economic model, the government plays:
a) a major role b) a minor role c) absolutely no role d) golf on Sundays
33. When individuals make decisions, the items they do not choose become:
a) Opportunity costs b) Scarce c) Goods and services d) Needs
Extra Credit:
1. What is the only word in English that begins and ends with the letters "und"
2. How many presidents has this country had?
3. Who sings the song with the following lyrics:
Friday night and the lights are low. Looking out for a place to go.
Where they play the right music, getting in the swing.
You come in to look for a king