S & D Part I

Which is true of the Law of Demand?

• Price increases, quantity increases

• Price increases, quantity decreases

Which is true of the Law of Supply?

• Price decreases, quantity decreases

• Price decreases, quantity increases

Which graph shows a change in the quantity demanded?

• 
• 

Which diagram shows a change in demand?

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• 

A surplus means that the quantity demanded is greater than the quantity supplied.

• True

• False

A shortage means that the quantity demanded is less than the quantity supplied.

• True

• False

When the price of Apple computers goes down, what probably happens to the demand for Windows-based computers?

• a. The demand for Windows-based computers increases

• b. The demand for Window-based computers decrease

• c. A change in the price of Apple computers has no effect on the demand for Windows-based computers

When the price of olive oil goes up, what probably happens to the demand for corn oil?

• a. The demand for corn oil increases

• b. The demand for corn oil decreases

• c. A change in the price of olive oil has no effect on the demand for corn oil

When the price of petroleum goes up, what probably happens to the demand for natural gas?

• a. The demand for natural gas increases

• b. The demand for natural gas decreases

• c. A change in the price of petroleum has no effect on the demand for natural gas

If everyone thinks that the price of tomatoes will go up next week, what is likely to happen to demand for tomatoes today?

• a. The demand for tomatoes increases

• b. The demand for tomatoes decreases

• c. Expectations about the price of tomatoes has no effect on the demand for tomatoes today