Download Supply and Demand Test

Supply and Demand Test
regulations
equilibrium price
tax
surplus
income effect
complement
price floor
movement
diminishing marginal utility (DMU)
income effect
subsidies
price ceiling
shortage
shift
demand
1. when the price is higher than the market price
2. gov't rules about how companies conduct business
3. required payment of money to the gov't to help fund gov't services
4. when you have a price floor, this usually results
5. when something other than price affects quantity supplied or demanded
6. when supply and demand meet
7. when one buys this product, one also tends to buy this as well
8. the effect that increasing or decreasing prices has on the buying power of income
9. when you have a price ceiling, this usually results
10. the effect that increasing or decreasing prices has on one’s buying power
11. payments to private businesses by the gov't
12. the usefulness or value of a product decreases with each additional purchase of it
13. when people are willing to pay for a good or service
14. when price is the only factor that affects quantity demanded or supplied
15. when the price is lower than the market price
16. List three pairs of complementary goods.
17. Write the law of demand and the law of supply. Label.
18. For each of the following scenarios, state whether supply or demand would change, the
direction the curve would shift, and the reason for the shift.
a. Market: candy. News event: Because of a federal sugar policy designed to protect U.S.
sugar producers, the price of sugar increases.
b. Market: cars. News event: Congress approves across-the-board tax cuts.
c. Market: gas. News event: Hurricane Katrina wipes out 60% of offshore refineries.
19. What language do consumers and producers use to communicate?
A. French
C. money
B. graphs
D. price
20. The amount of a good or service that a consumer is willing and able to buy at various possible
prices during a given time period is
A. supply.
C. income effect.
B. demand.
D. purchasing power.
21. __________ describes the usefulness of a product or the amount of satisfaction that an
individual receives from consuming a product.
A. Utility
C. Substitution effect
B. Determinant
D. Market size
22. Determinants of Demand
A. consumer tastes and preferences
B. income
E. consumer expectations
C. market size
D. prices of related goods
F. all of the above
23. Price causes changes in demand _____ the curve. Other factors in the change in demand cause
a _____ of the curve to the left or the right.
A. beyond, blending
C. along, shift
B. beside, angle
D. through, bending
24. When looking at a demand curve, a shift to the left means a(n) _______ in demand. While a
shift to the right means a(n) _______ in demand.
A. increase, decrease
B. decrease, increase
25. Demand: When a the product is not a necessity, there are readily available substitutes, and the
product’s cost represents a large portion of consumers’ income—that product is considered
A. inelastic
B. elastic
26. Demand: When a product is the product is a necessity, there are no or few readily available
substitutes, and the product’s cost represents a small portion of the consumers’ income—that
product is considered
A. inelastic
B. elastic
27. The way a business measures the elasticity of its product is to calculate its
A. purchasing power.
C. total revenue.
B. worthiness.
D. weight.
28. Supply: When a product can be made quickly, inexpensively, and using a few readily available
resources, it is considered
A. inelastic
B. elastic
29. Supply: When a product takes more time, money, and resources that are not readily available,
it is considered
A. inelastic
B. elastic
30. State whether the demand for each is elastic or inelastic and provide a reason.
ITEM
ELASTIC/INELASTIC
REASON
SALT
NIKE SHOES
31. Demand Schedule – Plot the information on the available graph. Label the demand curve D1.
If the price of a movie ticket was
$1.00
$2.00
$5.00
$7.00
$9.00
$11.00
People would buy
600
500
400
300
200
100
32. Supply Schedule – Plot the information on the available graph. Label the supply curve S1.
If the price of a movie ticket was
$1.00
$2.00
$5.00
$7.00
$9.00
$11.00
Seller would provide
0
100
250
300
500
700
33. What is the equilibrium price? ________ How many tickets would the seller provide at the
equilibrium price? _________
34. DVD prices plummet. Figure out if this affects demand or supply and draw a new curve that
reflects the impact. Label it either D2 or S2.
35. The local multiplex theatre is running a special on popcorn and soda. Regularly priced snacks
would cost $10.00, but the sale price is $5.00 with free refills. Figure out if this affects
demand or supply and draw a new curve that reflects the impact. Label it either D3 or S3.