Economics-Supply and Demand

An increase in the price of a product will reduce the amount of it purchased because:

• supply curves are upsloping.

• the higher price means that real incomes have risen.

• consumers will substitute other products for the one whose price has risen.

• consumers substitute relatively high-priced for relatively low-priced products.

Which of the following will not cause the demand for product K to change?

• a change in the price of close-substitute product J

• an increase in consumer incomes

• a change in the price of K

• a change in consumer tastes

Refer to the above diagram. A price of $20 in this market will result in:

• equilibrium

• a shortage of 50 units

• a surplus of 50 units

• a shortage of 100 units

Refer to the above diagram. The equilibrium price and quantity in this market will be:

• $1.00 and 200

• $1.60 and 130

• $.50 and 130

• $1.60 and 290

An effective ceiling price will

• induce new firms to enter the industry.

• result in a product surplus

• result in a product shortage

• clear the market

If the price of tamarind falls, there will be:

• an increase in the demand for tamarind

• an increase in the quantity demanded of tamarind

• a decrease in the demand for tamarind

• a shift in the demand for tamarind

If the price of cheeseburgers rises, then in the market for pizza

• supply increases and quantity demanded increases

• demand increases and quantity supplied increases

• supply decreases and quantity demanded decreases

• demand decreases and quantity supplied decreases

The law of demand refers to the

• inverse relationship between the price of a commodity and the quantity demanded of the commodity per time period..

• direct relationship between the desire a consumer has for a commodity and the amount of the commodity that the consumer demands

• inverse relationship between a consumer's income and the amount of a commodity that the consumer demands

• direct relationship between population and the market demand for a commodity

If the price of a good increases, then

• the demand for complementary goods will increase

• the demand for the good will increase

• the demand for substitute goods will increase

• the demand for the good will decrease

If consumer income declines, then the demand for

• normal goods will increase

• inferior goods will increase

• substitute goods will increase

• complementary goods will increase