Supply & Demand Practice Test (Module 2)

The quantity demanded of a good is the amount that buyers...

• Are willing to purchase

•  Are willing and able to purchase

• Are willing and able and need to purchase

• Are able to purchase

“Other things equal, when the price of a good rises, the quantity demanded of the good falls, and when the price falls, the quantity demanded rises.”  This relationship between price and quantity demanded...

• Applies to most goods in the economy

• Is represented by a downward-sloping demand curve

• Is referred to as the law of demand

• All of the above are correct

The law of demand states that, other things equal...

• When the price of a good falls, the demand for the good rises

• When the price of a good rises, the quantity demanded of the good rises

• When the price of a good rises, the demand for the good falls

• When the price of a good falls, the quantity demanded of the good rises

A downward-sloping demand curve illustrates...

• That demand decreases over time

• That prices fall over time

• The relationship between income and quantity demanded

• The law of demand

Which of the following demonstrates the law of demand?

• After Jon got a raise at work, he bought more pretzels at $1.50 per pretzel than he did before his raise

• Melissa buys fewer muffins at $0.75 per muffin than at $1 per muffin, other things equal

• Dave buys more donuts at $0.25 per donut than at $0.50 per donut, other things equal

• Kendra buys fewer Snickers at $0.60 per Snickers since the price of Milky Ways fell to $0.50 per Milky Way

The quantity supplied of a good is the amount that...

• Buyers are willing and able to purchase

• Sellers are able to produce

• Buyers and sellers agree will be brought to market

• Sellers are willing and able to sell

If the price of a good is low...

• Firms would increase profit by increasing output

• The quantity supplied of the good could be zero

• The supply curve for the good will shift to the left

• Firms can and should raise the price of the product

The law of supply states that, other things equal...

• An increase in price causes quantity supplied to increase

• An increase in price causes quantity supplied to decrease

• An increase in quantity supplied causes price to increase

• An increase in quantity supplied causes price to decrease

Other things equal, when the price of a good falls, the...

•  

  Quantity demanded of the good decreases

• Supply decreases

• Quantity supplied of the good decreases.

• Demand increases

Which of these statements best represents the law of supply?

• When input prices increase, sellers produce less of the good

• When production technology improves, sellers produce less of the good

• When the price of a good decreases, sellers produce less of the good

• When sellers’ supplies of a good increase, the price of the good increases