Chapter 3: Honors Econ Supply and Demand Review

Chapter 3: Honors Econ Supply and Demand Review

by Michael Phillips

​Competition in markets

• ​A competitive market - neither the consumer or the producer has a large influence on the price of a product. It basically sets itself i.e. a bunch of stores selling the same shoe in the mall

• ​Imperfect market - One company is the only supplier, or there is much supply and little demand i.e. a monopoly

Multiple Choice

One firm dominates the market is known as a:

• Monopoly
• Oligopoly
• Monopolistic Competition
• Pure Competition

​How is the price for a good or service determined?

​Combination of Supply and Demand

​

The Supply = How much is made available by the company (producer)

​

The Demand = How much is demanded by the consumer

Why is this true?

When a good becomes cheaper, people see it as a deal and will demand more of it. The opposite is true when the price of something goes up; people see it as expensive and are less likely to buy it.​

​What is the Law of Demand?

Consumers are willing to buy (demand) more of a good or service when prices go down

​AND

Consumers will buy (demand) less when process increase

Multiple Choice

Which of these best describes the law of demand?

• if prices go up, quantity demanded will fall and if prices go down, quantity demanded will go up

• if prices go up, quantity demanded will also go up and if prices go down, quantity demanded will also go down

• there is no law of demand, each situation is unique and demand and prices cannot be predicted

• prices will go up for certain goods when quantity demanded goes up and vice versa

Multiple Choice

According to the Law of Demand, when prices drop...

• demand will also drop

• demand will increase

• quantity demanded is unchanged

• supply increases

​Chapter 3: Supply and Demand Review

​Study Guide

Multiple Choice

In this market structure there is only one seller with a unique product

• monopoly
• perfect competition
• monopolistic competition
• oligopoly

Multiple Choice

If the price of Frozen Yogurt increased then the demand for ice cream will 

• increase
• decrease

​Competition

• ​Competitive Markets: Sellers and Buyers have many options and the market sets the price. i.e shoe stores at the mall selling the same shoes

• ​Imperfect market: Producers have an advantage such as a monopoly or many suppliers and only few buyers. Price can be manipulated

Multiple Choice

In this market structure there are many buyers and sellers with identical products

• perfect competition
• monopolistic competition
• monopoly
• oligopoly

Multiple Select

What are the factors that can change demand?

• Complimentary Goods

• Taste

• Income

• Population

• Substitute Goods

Open Ended

Name another complimentary good(s)

Open Ended

What is supply?

Open Ended

How would INCOME determine/change demand?

Multiple Choice

When the market for a good or service has a large number of sellers competing for business and selling the same product that would be considered:

• A monopoly

• An oligopoly

• Monopolistic Competition

• Perfect Competition

Open Ended

How would a consumers TASTE change demand?

Open Ended

What is the Law of Supply?

Multiple Choice

When there is only one person or company that controls the entire market for a good or service that would be considered:

• A Monopoly

• An Oligopoly

• Monopolistic Competition

• Perfect Competiton

Open Ended

How would POPULATION change demand?

Multiple Select

Which of the following are characteristics of a market with perfect competition? (Check all that apply)

• Differentiated Products

• Identical Products

• Small Number of Sellers

• Large Number of Sellers

• Well Informed Buyers

Multiple Choice

Which of the following goods or services would be the closest example to perfect competition?

• Agricultural Products

• Fast Food Industry

• Wireless Phone Service Industry

• Airline Industry

​These Factors can Shift the Demand Curve

​

• All of these factors can have an effect on the amount of a good demanded.

• Any change in the demand from these factors can be shown on a demand curve graph.

• A change in demand will cause the demand curve to shift either to the right or left.

• A shift to the left means there would be a decrease in demand, while a shift to the right would mean an increase in demand.

Multiple Choice

the amount of product producers are willing to bring to the market at any price.

• quantity supplied

• total product

• theory of production

• law of supply

Multiple Choice

This part of the market determines SUPPLY

• buyers

• sellers

• consumers

• us

Multiple Choice

When there is an INCREASE in Demand, the demand curve shifts?

• left

• it does not move

• Northwest

• right

Multiple Choice

When the supply of a product or service goes up and the demand stays the same the Price will typically do what? 

• rise

• fall

• stay the same

• Consumer

​

• ​

Multiple Choice

When there is a DECREASE in Demand, the demand curve shifts?

• left

• right

• no where

• around the graph

​How is the price for a good or service determined?

​Combination of Supply and Demand

​

The Supply = How much is made available by the company (producer)

​

The Demand = How much is demanded by the consumer

Law of Supply

Open Ended

What is supply?

Open Ended

What is the Law of Demand?

Multiple Choice

Which graph below shows the SUPPLY CURVE?

• A

• B

• C

• D

Open Ended

What is demand?

Why is this true?

When a good becomes cheaper, people see it as a deal and will demand more of it. The opposite is true when the price of something goes up; people see it as expensive and are less likely to buy it.​

​What is the Law of Demand?

Consumers are willing to buy (demand) more of a good or service when prices go down

​AND

Consumers will buy (demand) less when process increase

Multiple Choice

Price of Autos increase

• increase in supply

• increase in quantity supplied

• decrease in supply

• decrease in quantity supplied

Open Ended

Name another complimentary good(s)

Open Ended

How would INCOME determine/change demand?

Open Ended

How would a consumers TASTE change demand?

Open Ended

How would POPULATION change demand?

​These Factors can Shift the Demand Curve

​

• All of these factors can have an effect on the amount of a good demanded.

• Any change in the demand from these factors can be shown on a demand curve graph.

• A change in demand will cause the demand curve to shift either to the right or left.

• A shift to the left means there would be a decrease in demand, while a shift to the right would mean an increase in demand.

Multiple Choice

When there is an INCREASE in Demand, the demand curve shifts?

• left

• it does not move

• Northwest

• right

Multiple Choice

When there is a DECREASE in Demand, the demand curve shifts?

• left

• right

• no where

• around the graph

Law of Supply

Open Ended

What is the Law of Demand?

Multiple Choice

Which of these best describes the law of demand?

• if prices go up, quantity demanded will fall and if prices go down, quantity demanded will go up

• if prices go up, quantity demanded will also go up and if prices go down, quantity demanded will also go down

• there is no law of demand, each situation is unique and demand and prices cannot be predicted

• prices will go up for certain goods when quantity demanded goes up and vice versa

Multiple Choice

According to the Law of Demand, when prices drop...

• demand will also drop

• demand will increase

• quantity demanded is unchanged

• supply increases

Multiple Choice

If the price of Frozen Yogurt increased then the demand for ice cream will 

• increase
• decrease

Multiple Select

What are the factors that can change demand?

• Complimentary Goods

• Taste

• Income

• Population

• Substitute Goods

Open Ended

What is supply?

Open Ended

What is the Law of Supply?

Multiple Choice

the amount of product producers are willing to bring to the market at any price.

• quantity supplied

• total product

• theory of production

• law of supply

Multiple Choice

This part of the market determines SUPPLY

• buyers

• sellers

• consumers

• us

Multiple Choice

When the supply of a product or service goes up and the demand stays the same the Price will typically do what? 

• rise

• fall

• stay the same

• Consumer

Multiple Choice

Which graph below shows the SUPPLY CURVE?

• A

• B

• C

• D

Multiple Choice

Price of Autos increase

• increase in supply

• increase in quantity supplied

• decrease in supply

• decrease in quantity supplied

Multiple Choice

More sellers enter the "Pizza" market. What happens to the total number of pizzas supplied?

• they decrease (curve shifts left)
• they increase (curve shifts right)
• they stay the same (the curve stays)

​

​

Multiple Choice

The diagram represents a(n)

• increase in supply

• decrease in supply

• change in quantity supplied

• none of the above

Will the supply of the item decrease or increase?

Multiple Choice

A severe frost destroys this year's crop of oranges. Will the supply increase or decrease?

• Increase

• Stay the same

• Decrease

• Mother Nature stole the oranges

Multiple Choice

Entrepreneurs learn that the market for a new digital camera looks good, and many producers plan to get into this market? Will the supply of cameras....

• Decrease

• Increase

• Stay the same

• The demand will decrease

Multiple Choice

A new Wendy's restaurant opens in town. They are offering $15.00 an hour as a starting wage. Will happen to the supply of labor? 

• Increase

• Decrease

• People will quit

• People will move out of the area

Equilibrium-Shortage-Surplus

Multiple Choice

Equilibrium is achieved in the market when...

• the price is perfect

• the quantity is perfect

• the demand and supply are equal

Multiple Select

Some things that can lead to a shortage are...

• low demand

• low prices

• not enough resources

• too many producers

Multiple Choice

Shortages tend to have what effect on prices?

• Prices go down

• Prices go up

• Prices remain stagnant

Multiple Select

Some factors which can cause a surplus are..

• high prices

• high demand

• overproduction

• recession period

Multiple Choice

When sellers lower their prices due to a surplus of goods, this is in accordance with...

• the law of diminishing returns

• the law of supply

• the law of demand

Multiple Choice

Which is an example of complementary goods?

• Laptops and shampoo

• Margarine and butter

• Coca-Cola and Pepsi

• Printers and ink cartridges

Multiple Choice

If the current price is $800, how many houses will be sold?

• 24000 houses

• 9000 houses

• 15000 houses

Multiple Choice

If the current price is $300, how would market equilibrium be restored?

• Consumers will bid up the price

• Producers will lower the price

• The price will not change

Multiple Choice

If the current price is $300, which of the following would be the best description for the situation that exists in the market

• There is a shortage of 18 houses

• There is a shortage of 18000 houses

• There is a surplus of 18

• There is a surplus of 18000 houses

Multiple Choice

If the current price is $800, which of the following would be the best description for the situation that exists in the market

• There is a shortage of 12 houses

• There is a shortage of 12000 houses

• There is a surplus of 12

• There is a surplus of 12000 houses

Multiple Choice

Which statement below would be the most correct to describe the equilibrium quantity ?

• 15 rental houses

• 15000

• 15000 rental houses

• 15

Multiple Choice

Which statement below would be the most correct to describe the equilibrium price?

• $600

• $600 per month

• $500 per month

• $700

Multiple Choice

Define a surplus

• Where quantity demanded is less than quantity supplied

• Where quantity demanded is greater than quantity supplied

• Where quantity demanded is equal to quantity supplied

Multiple Choice

Define a shortage

• Where quantity demanded is less than quantity supplied

• Where quantity demanded is greater than quantity supplied

• Where quantity demanded is equal to quantity supplied

Multiple Choice

Does the red line located on the graph represent a price ceiling or price floor?

• Price ceiling

• Price floor

Multiple Choice

Suppose that the market for coats is described as follows: What is the equilibrium price of coats?

• 120

• 100

• 80

• 60

Multiple Choice

Price is currently above equilibrium. This will create excess__________. We would expect price to ___________.

• demand; increase

• demand; decrease

• supply; increase

• supply; decrease

Multiple Select

Which of the following demonstrates price equilibrium? (More than one answer.)

Multiple Choice

Which of these demonstrates a shortage of goods?

Multiple Choice

Which of these demonstrates a surplus of goods?

Multiple Choice

Which statement is correct about the Law of Demand?

• When the price of a good decreases, quantity demanded decreases

• When the price of a good decreases, quantity demanded increases

Multiple Choice

Which statement is correct about the Law of Supply?

• When the price of a good decreases, quantity supplied decreases

• When the price of a good decreases, quantity supplied increases

Multiple Choice

According to the laws of supply and demand, when will companies produce more of a product?

• When the price people will pay for it goes down
• When demand decreases
• When they can sell it for a higher price
• When the economy turns downward

Multiple Choice

The movement from Point A to Point B represents a(n)

• increase in the price.

• decrease in the quantity supplied.

• shift in the supply curve.

• Both Orange and Blue are correct.

Multiple Choice

What does this graph show?

• Shortage

• Surplus

• Supply Table

• Equilibrium

Multiple Choice

Goods that are bought and used together are

• complementary goods

• substitute goods

• income goods

• unrelated goods

Multiple Choice

Which is an example of complementary goods?

• Laptops and shampoo

• Margarine and butter

• Coca-Cola and Pepsi

• Printers and ink cartridges

Multiple Choice

If the current price is $300, how many houses will be sold ?

• 6000 houses

• 24000 houses

• 15000 houses

Multiple Choice

If the current price is $800, how will market equilibrium be restored?

• Consumers will bid up the price

• Producers will lower the price

• The price will not change

Multiple Choice

If the current price is $300, which of the following would be the best description for the situation that exists in the market

• There is a shortage of 18 houses

• There is a shortage of 18000 houses

• There is a surplus of 18

• There is a surplus of 18000 houses

Multiple Choice

If the current price is $800, which of the following would be the best description for the situation that exists in the market

• There is a shortage of 12 houses

• There is a shortage of 12000 houses

• There is a surplus of 12

• There is a surplus of 12000 houses

Multiple Choice

Which statement below would be the most correct to describe the equilibrium quantity ?

• 15 rental houses

• 15000

• 15000 rental houses

• 15

Multiple Choice

Which statement below would be the most correct to describe the equilibrium price?

• $600

• $600 per month

• $500 per month

• $700

Multiple Choice

Define a surplus

• Where quantity demanded is less than quantity supplied

• Where quantity demanded is greater than quantity supplied

• Where quantity demanded is equal to quantity supplied

Multiple Choice

Define a shortage

• Where quantity demanded is less than quantity supplied

• Where quantity demanded is greater than quantity supplied

• Where quantity demanded is equal to quantity supplied

Multiple Choice

Suppose the government sets a price ceiling of $80. How large will the shortage be?

• 5 million coats

• 4 million coats

• 3 million coats

• 2 million coats

Multiple Choice

Suppose that the market for coats is described as follows: What is the equilibrium price of coats?

• 120

• 100

• 80

• 60

Multiple Choice

Price is currently above equilibrium. This will create excess__________. We would expect price to ___________.

• demand; increase

• demand; decrease

• supply; increase

• supply; decrease

Multiple Select

Which of the following demonstrates price equilibrium? (More than one answer.)

Multiple Choice

Which of these demonstrates a shortage of goods?

Multiple Choice

Which of these demonstrates a surplus of goods?

Multiple Choice

What is the equilibrium quantity in this graph?

• $1.50
• $1.00
• 600
• 800

Multiple Choice

What is the Equilibrium Quantity?

• 50

• 60

• 70

• 80

Multiple Choice

What is the Equilibrium Price?

• 1

• 2

• 3

• 4

Multiple Choice

Is the blue line located in the graph representing a price ceiling or price floor?

• Price ceiling

• Price floor

Multiple Choice

Which statement is correct about the Law of Demand?

• When the price of a good decreases, quantity demanded decreases

• When the price of a good decreases, quantity demanded increases

Multiple Choice

Which statement is correct about the Law of Supply?

• When the price of a good decreases, quantity supplied decreases

• When the price of a good decreases, quantity supplied increases

Multiple Choice

According to the laws of supply and demand, when will companies produce more of a product?

• When the price people will pay for it goes down
• When demand decreases
• When they can sell it for a higher price
• When the economy turns downward

Multiple Choice

The movement from Point A to Point B represents a(n)

• increase in the price.

• decrease in the quantity supplied.

• shift in the supply curve.

• Both Orange and Blue are correct.

Multiple Choice

What is the Equilibrium Price?

• 1

• 2

• 3

• 4

Multiple Choice

What does this graph show?

• Shortage

• Surplus

• Supply Table

• Equilibrium

Multiple Choice

Goods that are bought and used together are

• complementary goods

• substitute goods

• income goods

• unrelated goods

Multiple Choice

The desire or willingness a consumer has to purchase a good or a service is called?

• shortage

• supply

• price

• demand

Multiple Choice

What does this curve represent?

• supply

• equilibrium

• demand

• surplus

Multiple Choice

What does this curve represent?

• demand

• supply

• equilibrium

• shortage

Multiple Choice

If a price is below the equilibrium price it creates a...

• shortage

• surplus

• market price

• supply

Multiple Choice

If a price is above equilibrium price, it creates a...

• shortage

• surplus

• market price

• demand

Multiple Choice

For the law of supply, as price rises, what happens to quantity supplied?

• it goes up

• it goes down

• it stays the same

• it is not effected

Multiple Choice

For the law of demand, as price rises, what happens to quantity demanded?

• it goes up

• it goes down

• it stays the same

• it is not effected

Multiple Choice

This part of the market determines SUPPLY

• buyers

• sellers

• consumers

• us

Multiple Choice

This part of the market determines DEMAND

• buyers

• sellers

• suppliers

• store owners

Multiple Choice

A group of buyer and sellers of a particular good or service

• Supply

• Demand

• Agency

• Market

Multiple Choice

At which quantity does supply and demand reach equilibrium?

• 500

• 600

• 700

• 800

Multiple Choice

At which price is equilibrium?

• $1.00

• $1.25

• $1.50

• $1.75

Multiple Choice

What does this curve represent?

• demand

• supply

• equilibrium

• shortage

Multiple Choice

If a price is below the equilibrium price it creates a...

• shortage

• surplus

• market price

• supply

Multiple Choice

If a price is above equilibrium price, it creates a...

• shortage

• surplus

• market price

• demand

Multiple Choice

Suppose you like banana cream pie made with vanilla pudding. Assuming all other things are constant, you notice that the price of bananas is higher. How would your demand for vanilla pudding be affected by this?

• It would decrease.

• It would increase.

• It would be unaffected.

• There is insufficient information given to answer the question.

Multiple Choice

For the law of supply, as price rises, what happens to quantity supplied?

• it goes up

• it goes down

• it stays the same

• it is not effected

Multiple Choice

For the law of demand, as price rises, what happens to quantity demanded?

• it goes up

• it goes down

• it stays the same

• it is not effected

Multiple Choice

This part of the market determines SUPPLY

• buyers

• sellers

• consumers

• us

Multiple Choice

This part of the market determines DEMAND

• buyers

• sellers

• suppliers

• store owners

Multiple Choice

At which quantity does supply and demand reach equilibrium?

• 500

• 600

• 700

• 800

Multiple Choice

Equilibrium in a market means which of the following?

• the point at which quantity supplied and quantity demanded are the same
• the point at which unsold goods begin to pile up
• the point at which suppliers begin to reduce prices

Multiple Choice

When quantity demanded exceeds quantity supplied at a certain cost

• shortage
• fad
• search costs
• surplus

Multiple Choice

When quantity supplied exceeds quantity demanded at a certain price.

• shortage
• fad
• search costs
• surplus

Multiple Choice

When quantity supplied is not equal to quantity demanded

• price ceiling
• excess demand
• equilibrium
• disequilibrium

Multiple Choice

Point at which supply and demand come together

• price ceiling
• excess demand
• equilibrium
• disequilibrium

Multiple Choice

Refer to Table 4-2. In the table shown, what would be the result if the price were $8?

• a surplus of 30 units would exist and price would tend to fall.

• a surplus of 60 units would exist and price would tend to rise.

• a surplus of 60 units would exist and price would tend to fall.

• a shortage of 30 units would exist and price would tend to rise.

Multiple Choice

Refer to Graph 4-5. According to the graph, What occurs at a price of $7?

• there would be a shortage of 40 units.

• there would be a surplus of 40 units.

• there would be a surplus of 20 units.

• the market would be in equilibrium.

Multiple Choice

Refer to Graph 4-5. According to the graph, what are the equilibrium price and quantity?

• $7, 20.

• $7, 60.

• $5, 40.

• $3, 60.

Multiple Choice

Other things equal, when the price of a good rises, the quantity supplied of the good also rises. What best refers to this situation?

• The law of increasing costs.

• The law of diminishing returns.

• The law of supply.

• The law of demand

Multiple Choice

What best refers to the situation when the price of a good or service changes?

• there is a movement along a stable demand curve.

• demand shifts in the opposite direction.

• demand shifts in the same direction.

• supply shifts in the opposite direction.

Multiple Choice

What does the Latin phrase Ceteris paribus literally mean?

• "other things being equal."

• "after this therefore because of this."

• "to respond slowly to a change in price."

• "There's no such thing as a free lunch."

Multiple Choice

Refer to Graph 4-1. The movement from point A to point B on the graph shows

• a decrease in demand.

• an increase in demand.

• an increase in quantity demanded.

• a decrease in quantity demanded.

Multiple Choice

Suppose you like banana cream pie made with vanilla pudding. Assuming all other things are constant, you notice that the price of bananas is higher. How would your demand for vanilla pudding be affected by this?

• It would decrease.

• It would increase.

• It would be unaffected.

• There is insufficient information given to answer the question.

Multiple Choice

If the price of a substitute to good X increases, then

• The demand for good X will increase.

• The market price of good X will decrease.

• The demand for good X will decrease.

• The demand for good X will not change.

Multiple Choice

When companies compete in a market economy, what is usually the result?

• Consumers are able to buy goods for the best available price.

• People pay much higher prices for goods.

• There are frequent shortages of goods on the market.

• Producers refuse to sell some of their products.

Multiple Choice

Which statement expresses a central idea of how the laws of supply and demand work?

• The government sets the prices for goods and services.

• Prices are determined by the interaction of producers and consumers.

• Consumers alone determine the prices for goods and services.

• Technology dictates the prices charged for goods and services.

Multiple Choice

Which of the following best refers to the market equilibrium price?

• Surpluses depress the number of goods supplied.

• Shortages and surpluses will have no effect on the market.

• The government will not intervene in the market.

• The quantity demanded is the same as the quantity supplied.