Supply and Demand

There is only one gas station on a stretch of highway. Then two more gas stations open next to the first. Demand for gas does not change during this time. What will happen to the price of gas on this stretch of highway and why?

• The price of gas will decrease because there is more competition among businesses.
• The price of gas will decrease because there is less competition among businesses.
• The price of gas will increase because there is more competition among businesses.
• The price of gas will increase because there is less competition among businesses.

The Supply Curve is upward-sloping because...

• as price increases, consumers demand less.
• none of the choices
• as price increases, so do costs.
• As the price increases, suppliers can earn higher levels of profit or justify higher marginal costs to produce more.

Part of the reason that LeBron James earns millions of dollars each year while school teachers may earn $30,000 is because…

• consumers enjoy basketball to the point that they are willing to spend lots of money and time attending games and watching commercials.
• the supply of superstar basketball players is low, while the supply of competent teachers is much larger.
• demand for LeBron James' talents is very high since he can generate so much revenue for a firm.
• all of the choices

Which of the following could cause the price for automobiles to decrease?

• The local factory gives a big raise to its employees.
• None of the choices
• A brand new automobile dealership opens in town.
• The price of gasoline falls.

When college students leave town for the summer, the demand for meals at the local restaurants declines. This may result in…

• more people moving into town.
• a decrease in price.
• none of the choices
• an increase in price.

If the cost of computers falls, then…

• the demand for computers goes up.
• the supply of computers goes up.
• none of the choices
• the demand for computers goes down.

Which of the following could cause the demand for airline travel to decrease? 

• The price for traveling by airplane decreases
• The price of traveling by airplane remains the same
• The price for traveling by airplane increases
• None of the choices

Which of the following is NOT a component of demand?

• Surplus
• Willingness
• Desire
• Ability

 A surplus of a product will occur when the price is…

• none of the choices
• too high
• at equilibrium
• too low

What is it called when the quantity which is demanded is higher than the quantity supplied?

• None of the choices
• Surplus
• Equilibrium
• Shortage