Download Additional Help Chapter # 4 –– Supply and Demand

University of Lethbridge – Department of Economics
ECON 1012 – Introduction to Macroeconomics
Instructor: Michael G. Lanyi
Additional Help
Chapter # 4 –– Supply and Demand
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CHAPTER 4
Supply and Demand
POP QUIZ
1. An increase in demand:
a. causes the demand curve to shift to the left.
b. means consumers are willing and able to buy more at any price.
c. creates a surplus at the original price.
d. could be caused by an increase in the price of a complementary good.
2. Which of the following would cause an increase in the demand for a good?
a. A decrease in price.
b. An increase in consumer tastes for the good.
c. A decrease in the price of a substitute good.
d. Consumers expect the price of the good to fall in the near future.
3. The law of supply:
a. states that as the price rises, buyers will purchase less.
b. states that as the price rises, sellers will supply a greater quantity.
c. is applicable in only a few markets.
d. is reflected as a downward sloping curve.
4. An increase in supply:
a. will cause the supply curve to shift to the left.
b. could be caused by a decrease in the price of a necessary factor of production.
c. means sellers will produce less at any price.
d. will cause the quantity demanded to fall.
5. The law of demand states that:
a. there is an inverse relationship between the price and quantity demanded.
b. there is a direct relationship between the price and quantity demanded.
c. as income rises, quantity demanded also rises.
d. a decrease in price will increase demand.
Page 4- 1, Chapter 4: Supply and Demand
6. An increase in demand:
a. will create a higher equilibrium price.
b. will create a smaller equilibrium quantity.
c. is reflected as a leftward shift in demand.
d. could be caused by an increase in the price of a substitute good or service.
7. Compared to last year, fewer oranges are being bought and the selling price has decreased.
This could have been caused by:
a. an increase in demand.
b. an increase in supply.
c. a decrease in demand.
d. a decrease in supply.
8. A decrease in supply will:
a. decrease the equilibrium price.
b. increase the equilibrium quantity.
c. will create a temporary surplus that will be eliminated as the price rises.
d. be reflected graphically as a leftward shift of the supply curve.
9. If demand and supply both increase, this will cause:
a. an increase in the equilibrium quantity, but an uncertain effect on the equilibrium price.
b. an increase in the equilibrium price, but an uncertain effect on the equilibrium quantity.
c. an increase in equilibrium price and quantity.
d. a decrease in the equilibrium price and quantity.
10. Which of the following would most likely increase the supply of a good?
a. An increase in the selling price of another good producers could produce.
b. A decrease in the cost of needed inputs (such as raw materials) used in the production of
the good.
c. A decrease in consumer incomes.
d. A tariff imposed on the good.
11. If at some price the quantity supplied exceeds the quantity demanded, then:
a. a surplus exists and the price will fall over time as sellers competitively bid down the
price.
b. a shortage exists and the price will rise over time as buyers competitively bid up the
price.
c. the price is below equilibrium.
d. equilibrium will be reestablished as the demand curve shifts to the left.
Page 4-2, Chapter 4: Supply and Demand
12. Which of the following would most likely increase the demand for hot dog buns?
a. An increase in the price of wheat used in the production of the buns.
b. A decrease in the number of consumers of hot dog buns.
c. A decrease in the price of hot dogs.
d. A decrease in the price of hot dog buns.
13. Compared to last year, more television sets are being bought while the selling price has
risen. This could have caused by:
a. an exception to the law of demand.
b. an increase in supply.
c. an increase in demand.
d. a decrease in supply.
14. If we observe the price of a good or service rising, then this could have been caused by:
a. an increase in demand.
b. an increase in supply.
c. a temporary surplus.
d. a small increase in demand accompanied with a huge increase in supply.
Page 4-3, Chapter 4: Supply and Demand
ANSWERS TO POP QUIZ
Please solve it first.
1. b 2. b 3. b 4. b 5. a 6. a 7. c 8. d 9. a 10. b 11. a 12. c 13. c 14. a 15. b
Page 4-4, Chapter 4: Supply and Demand