Economics: Supply and Demand Unit Test Review

Which of the following pairs of goods are SUBSTITUTES?

• Jelly and Jam

• Eggs and Bacon

• Apples and Broccoli

• Mugs and Candles

Which of the following explains the Law of Demand?

• When prices go down, people have an increased income.

• When price increases, quantity demanded decreases.

• When price increases, quantity demanded increases.

• When demand decreases, supply decreases.

Which of the following pairs of goods are COMPLEMENTS?

• Jelly and Jam

• Eggs and Bacon

• Apples and Broccoli

• Mugs and Candles

What is the Law of Supply?

• When demand goes up, supply decreases.

• Supply shifts to the right due to technology.

• When price increases, quantity supplied decreases.

• When price increases, quantity supplied increases.

The cost of wood increases sharply. What happens to the supply for pencils?

• It will increase due to producer expectations.

• It will decrease due to producer expectation.

• It will increase due to cost of inputs.

• It will decrease due to cost of inputs.

Which of the following signifies a shortage?

• Quantity Supplied > Quantity Demanded

• Quantity Demanded > Quantity Supplied

• Quantity Supplied = Quantity Demanded

• None of these.

What is market clearing price?

• Quantity Supplied > Quantity Demanded

• Quantity Demanded > Quantity Supplied

• Quantity Demanded = Quantity Supplied

• None of these

When there is a decrease in supply or demand, the curve will shift to the....?

• Right

• Left

• Top

• Bottom

Assume peanut butter and jelly are complementary goods. When the price of jelly increases, what will happen to the demand of peanut butter?

• It will decrease.

• It will increase.

• It will remain constant.

• Complementary goods only affect the supply curve.

When consumer income decreases,

• demand for normal goods increases.

• demand for normal goods stays constant.

• demand for inferior goods increases.

• supply for inferior goods increases.