Demand and Supply

A group of buyers and sellers of a particular good or service is called a(n)

• coalition.

• economy.

• market

• competition

In competitive markets, which of the following is not correct?

• Firms produce identical products

• No individual buyer can influence the market price.

• Some sellers can set prices

• Buyers are price takers.

The law of demand states that, other things equal, an increase in

• price causes quantity demanded to increase.

• price causes quantity demanded to decrease.

• quantity demanded causes price to increase.

• quantity demanded causes price to decrease

Suppose Phil and Miss Kay are the only consumers in the market. If the price is $12, then the market quantity demanded is

• 0 units

• 2 units

• 4 units

• 6 units

If mayonnaise and Miracle Whip are substitutes, then which of the following would increase the demand for Miracle Whip?

• a decrease in the price of Miracle Whip

• an increase in the price of mayonnaise

• a decrease in the price of mayonnaise

• no correct answer

Recent forest fires in the western states are expected to cause the price of lumber to rise in the next six months. As a result, we can expect the supply of lumber to

• fall in six months but not now.

• increase in six months when the price goes up.

• fall now.

• increase now to meet as much demand as possible.

What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce them?

• Both the equilibrium price and quantity would increase

• Both the equilibrium price and quantity would decrease

• The equilibrium price would increase, and the equilibrium quantity would decrease

• The equilibrium price would decrease, and the equilibrium quantity would increase.

Whenever a determinant of supply other than price changes, the supply curve shifts

• True

• False