H1 Econs - Demand and Supply

What is the difference between demand and quantity demanded?

Demand refers to the entire relationship between prices and the quantity of a particular product or service backed by consumers’ willingness and ability to pay for the good whereas... 

• quantity demanded refers to how much of the product or service is demanded at one particular price. 

• quantity demanded refers to the quantity of the product or service that will eventually be bought by consumers. 

• quantity demanded refers to how much of the product or service is demanded at one particular time. 

• quantity demanded refers to the quantity of the product or service that is demanded at the highest price. 

In deriving the demand curve for a good, which of the following is allowed to vary?

• Income

• The price of the good being considered

• The price of all other goods

• Population

The law of demand holds that:

• People normally buy more of a good as their income rises

• The marginal utility of consumers increases as price of the good falls

• The quantity of a good that consumers willingly purchase increases as the price of the good falls

• A surplus of the good causes price to fall

Which of the following will not shift the demand curve for beef?

• A widely publicised study which indicates beef increases one’s cholesterol

• A reduction in the price of cattle feed

• An effective advertising campaign by pork producers

• A change in the incomes of beef consumers

If the government announces that a tax of 50 cents per 5 kg of rice will be implemented in two weeks, what would you expect to happen today to the current market for rice?

(i) The demand for rice will increase

(ii) The demand for rice will decrease

(iii) The supply of rice will fall

(iv) The price of rice will increase

• (i) and (iv)

• (ii) and (iv)

• (iii) and (iv)

• Only (iii)

Suppliers produce two goods, cheese and butter. Both goods use milk as their main factor of production. Assume that there is no cost to switch resources from cheese production to butter production and vice versa. Suppose the demand for butter increases. What do we expect to happen to the market for cheese?

• The price will go up and the equilibrium quantity will drop

• The price will go up and the equilibrium quantity will rise

• The price will go down and the equilibrium quantity will drop

• The price will go down and the equilibrium quantity will rise

The supply curve is upward sloping because:

• As price increases, there will be an increase in marginal cost of production.

• As price increases, producers are incentivised to produce more as they can earn higher levels of profit.

• As price increases, consumers demand less of the good.

• As price increases, there will be an increase in the number of sellers.

There is a rise in the price of cheese and this causes a rise in the price of cheese cakes. The change in price of cheese cakes causes consumers to buy less.

To explain the changes in the market for cheese cakes, we have had a change in:

• supply and quantity demanded of cheese cakes

• supply and demand for cheese cake

• demand and quantity demanded of cheese cakes

• demand and quantity supplied of cheese cakes

If both the demand curve and supply curve shift to the left,

• price will fall, but we cannot predict the change in quantity

• price will rise, but we cannot predict the change in quantity

• quantity will rise, but we cannot predict the change in price

• quantity will fall, but we cannot predict the change in price

Suppose that both the price of gasoline and the amount of gasoline sold decline.

Which of the following would account for this?

• Both demand and supply curves shift left; extent of shift in demand is greater

• Both demand and supply curves shift right; extent of shift in supply is greater

• Demand curve shifts right and supply curve shifts left; extent of shift in demand is greater

• Supply curve shifts left, but no change in the demand curve