Download supply and demand practice two

Supply and Demand practice two
Multiple Choice
Identify the choice that best completes the statement or answers the question.
Figure 5-1: Demand for Coconuts
____
1. Use the “Demand for Coconuts” Figure 5-1. If fish is a substitute good for coconuts and the price of fish
increases, then the movement that would take place in the model could be:
A. A to C.
B. B to A.
C. C to A.
D. B to E.
E. A to B.
____
2. Use the “Demand for Coconuts” Figure 5-1. If coconuts are considered a normal good and the overall
income level of consumers is falling, then the movement that would take place in the model could be:
A. A to C.
B. B to A.
C. C to A.
D. E to B.
E. A to B.
Price per Bag
$0.90
0.80
0.70
0.60
0.50
0.40
0.30
____
Quantity Demanded (bags per month)
George
Barbara
10
0
15
10
20
20
25
30
30
40
35
50
40
60
Table 5-1: The Demand for Chocolate-Covered Peanuts
Dan
60
80
100
120
140
160
180
3. Use Table 5-1. If George, Barbara, and Dan are the only three buyers in the market, and the price of a bag of
chocolate-covered peanuts is $0.80, the total market demand is ________ bags per month.
A. 70
B.
C.
D.
E.
80
105
280
15
____
4. A decrease in the price of a good will result in:
A. an increase in demand.
B. an increase in supply.
C. an increase in the quantity demanded.
D. more being supplied.
E. a rightward shift of the demand curve.
____
5. An announcement that smoking will harm your ability to think clearly will most likely result in:
A. an increase in the quantity of cigarettes demanded.
B. a decrease in the demand for cigarettes.
C. no change in smoking habits.
D. an increase in the price of cigarettes.
E. an increase in the quantity of cigarettes supplied.
____
6. Which of the following is likely to cause a rightward shift in the demand for home-delivered pizza?
A. a lower price of pizza
B. a lower price of fast-food hamburgers
C. a higher price of pepperoni
D. a larger population
E. a lower price of pepperoni
____
7. A decrease in the price of a good will result in:
A. an increase in demand (a rightward shift in the demand curve).
B. an increase in supply (a rightward shift in the supply curve).
C. an increase in the quantity demanded along a given demand curve.
D. An increase in the quantity supplied along a given supply curve.
E. a decrease in supply (a leftward shift in the supply curve).
____
8. When the price of gas goes down and the demand for tires goes up, this means tires and gas are:
A. substitutes.
B. complements.
C. both expensive.
D. both inexpensive.
E. both inferior goods.
____
9. A shift to the left of a supply curve is caused by:
A. an increase in the number of sellers.
B. a technological improvement.
C. an increase in the cost of an input.
D. an increase in the number of buyers.
E. a decrease in consumer income if the product is a normal good.
____ 10. If the market for buffalo meat is in equilibrium, it means that the price of buffalo meat will probably
________ in the near future.
A. slightly increase
B. not change
C. slightly decrease
D. greatly increase
E. greatly decrease
____ 11. If suppliers expect prices to rise next year for their product, then one would expect:
A. that this will shift the demand curve for the product right this year.
B. a decrease in the quantity demanded this year.
C. that this will shift the supply curve for the product to the left this year.
D. a shift in the supply curve for the product to the right this year.
E. an increase in the quantity demanded this year.
Figure 6-6: Market for Candies
____ 12. Use the “Market for Candies” Figure 6-6. Equilibrium occurs at a price of ________, and the equilibrium
quantity is equal to ________.
A. P1; Q5
B. P2; Q3
C. P3; Q2
D. P1; Q3
E. P3; Q3
Figure 7-1: Demand and Supply of Gasoline
____ 13. Use the “Demand and Supply of Gasoline” Figure 7-1. When the supply curve shifted from S1 to S2, the
new intersection of supply and demand has a price of ________ and quantity of 400. This could have resulted
from ________.
A. $1.50; an increase in consumers' income if gasoline is a normal good
B. $1.50; an increase in refining technology
C. $2.00; an increase in the number of buyers
D. $2.00; an increase in consumers' income
E. $1.50; an increase in the price of crude oil
____ 14. In the market for corn tortilla chips, what would definitely cause a price increase?
A. The medical community issues a strong warning against the consumption of corn chips.
B. There is a technological advancement in the tortilla chip production process.
C. There is a fungus that kills much of the corn crop in Nebraska.
D. The price of salsa triples.
E. Household income falls and corn chips are a normal good.
Figure 7-3: Supply and Demand in the Orange Juice Market
____ 15. Use the “Supply and Demand in the Orange Juice Market” Figure 7-3. Assume that a hurricane hits
Florida. In response, what would be the most likely equilibrium point in the orange juice market illustrated?
A. A
B. B
C. D
D. E
E. C
____ 16. Suppose the local real estate market is in equilibrium. Recently a recession has caused local household
incomes to decline. At the same time, construction of a large subdivision of new homes has just been
completed. Given these two changes, we can predict the price of real estate will ________ and the quantity of
real estate bought and sold will ________.
A. fall; fall if the demand decrease is larger than the supply increase
B. fall; rise if the demand decrease is larger than the supply increase
C. fall if the demand decrease is larger than the supply increase; rise
D. rise if the supply increase is larger than the demand decrease; fall
E. rise; rise
____ 17. A new wonder diet that results in a dramatic loss of weight sweeps through America. The key to the diet is to
eat unlimited amounts of red meat (beef) but no poultry (chicken) or carbohydrate-rich foods. As millions of
Americans switch to the new diet, we can expect:
A. an increase in the demand for beef, leading to a shift to the right in the demand curve for
beef and higher beef prices.
B. an increase in the demand for beef, leading to a shift to the right in the demand curve for
beef and lower beef prices.
C. a decrease in the supply of beef, leading to a shift to the left in the supply curve for beef
and higher beef prices.
D. a decrease in the demand for beef, leading to a shift to the left in the demand curve for
beef and higher beef prices.
E. a decrease in the demand for chicken, leading to a shift to the left in the demand curve for
chicken and higher chicken prices.
____ 18. The United States increases tariffs on imports of lumber from Canada, which causes the price of lumber to
increase in the United States. The equilibrium price of new homes in the United States will ________ and the
equilibrium quantity of new homes in the United States will ________.
A. increase; increase
B. increase; decrease
C. decrease; increase
D. decrease; decrease
E. stay the same; stay the same
____ 19. A decrease in demand, with no change in supply, will lead to ________ in equilibrium quantity and ________
in equilibrium price.
A. an increase; an increase
B. an increase; a decrease
C. a decrease; an increase
D. a decrease; a decrease
E. no change; decrease
____ 20. Gasoline, a derivative of oil, is a large part of transportation costs for many producers. If the price of oil
increases at the same time that incomes fall for many consumers, one would expect that the equilibrium price
of many normal goods would ________, while their equilibrium quantities would ________.
A. fall; rise
B. fall, rise, or stay the same; fall
C. fall; fall, rise, or stay the same
D. rise; fall
E. rise; rise
Supply and Demand practice two
Answer Section
MULTIPLE CHOICE
1. ANS:
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20. ANS:
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A
PTS:
Critical Thinking
C
PTS:
Critical Thinking
C
PTS:
Critical Thinking
C
PTS:
Concept-Based
B
PTS:
Critical Thinking
D
PTS:
Concept-Based
C
PTS:
Concept-Based
B
PTS:
Concept-Based
C
PTS:
Concept-Based
B
PTS:
Definitional
C
PTS:
Critical Thinking
B
PTS:
Analytical Thinking
B
PTS:
Critical Thinking
C
PTS:
Critical Thinking
A
PTS:
Critical Thinking
A
PTS:
Critical Thinking
A
PTS:
Critical Thinking
B
PTS:
Critical Thinking
D
PTS:
Critical Thinking
B
PTS:
Analytical Thinking
1
DIF: M
REF: Module 5
1
DIF: M
REF: Module 5
1
DIF: M
REF: Module 5
1
DIF: M
REF: Module 5
1
DIF: M
REF: Module 5
1
DIF: E
REF: Module 5
1
DIF: M
REF: Module 5
1
DIF: M
REF: Module 5
1
DIF: M
REF: Module 6
1
DIF: E
REF: Module 6
1
DIF: M
REF: Module 6
1
DIF: E
REF: Module 6
1
DIF: M
REF: Module 7
1
DIF: M
REF: Module 7
1
DIF: M
REF: Module 7
1
DIF: D
REF: Module 7
1
DIF: M
REF: Module 7
1
DIF: M
REF: Module 7
1
DIF: M
REF: Module 7
1
DIF: D
REF: Module 7