Supply and Demand

The law of demand states that if the price of CD’s rise, consumers will

• Buy more CDs
• Buy fewer CDs
• Quantity demanded will not change

The law of supply states that if the price of CD’s rise, suppliers will

• Supply more CDs
• Supply fewer CDs
• Quantity supplied will not change

Which of the following is NOT a determinant of the supply of peanut butter?

• The price of peanuts 
• The wages of peanut butter factory workers 
• The income of peanut butter consumers
• Existing peanut butter making technology

Which of the following will cause an increase in demand for snowboards?

• More costly production methods 
• A decrease in the price of lift tickets at resorts in Colorado 
• A decrease in consumer income   
• A decrease in the population 

What does a “surplus” (extra amount) of goods in a market imply?

• Prices are too high
• Prices are too low
• Supply is too low
• Demand is too high

The United States imports many cars from Japan. Suppose that the price of material(s) that Japan uses in making cars declines. What is the INITIAL (first) effect this will have on the Japanese car manufacturers?

• The input costs of Japanese made cars to the US will increase 
• The quantity supply of Japanese made cars sold in the US will decrease 
• The input costs of Japanese made cars in the US will decrease 
• The quantity demand of Japanese made cars sold in the US will decrease

Americans revive their love of SUV’s and the newly remodeled, but still “gas guzzling” Hummer. What happens to the market for gasoline?

• Demand for gasoline will decrease 
• Demand for gasoline will increase
• Demand for gasoline will stay the same

Due to a disappointing economy, Americans are cutting back on the family vacation road trips. What happens to the market for gasoline?

• Demand for gasoline will decrease 
• Demand for gasoline will increase
• Demand for gasoline will stay the same

Costs of producing gasoline has increased due to rising energy costs. What happens to the market for gasoline?

• Supply for gasoline will decrease 
• Supply for gasoline will increase
• Supply for gasoline will stay the same

In an attempt to increase the production of oil and gasoline, Congress and the President have given the okay to drill in the Alaskan Arctic Preserve. What happens to the market for gasoline?

• Supply for gasoline will decrease
• Supply for gasoline will increase
• Supply for gasoline will stay the same