Economics - Test 3 - Supply and Demand

What do sellers do if they expect the price of their goods to increase dramatically in the near future?

• sell the goods now but try to get the higher price for them

• store the goods indefinitely regardless of when the price rises

• store the goods until the price rises

• sell the goods now and try to invest the money instead of resupplying

The price of Apple products continues to rise. According to the law of supply, Apple will respond to this price increase by

• decreasing production.

• keeping production steady.

• increasing production.

• halting production.

If prices rise and income stays the same, what is the effect on demand?

• More goods are bought.

• Demand stays the same.

• Fewer goods are bought.

• More is bought of some goods and less of others.

Businesses multiply the price they charge for a good by the quantity sold to calculate

• elastic demand.

• market demand.

• profit shares.

• total revenue.

Both individual and market supply schedules show possible combinations of

• goods and services.

• profits and income.

• volume and output.

• price and quantity supplied.

Which of the following would best be considered a compliment to coffee?

• donuts

• tea

• chicken

• water

The main factor that drives decisions about production is the

• government regulations and rules.

• desire to maximize profits.

• public need for better goods.

• availability of natural resources.

Due to an increase in her rent, Cynthia needs to cut back her spending on other items. Which of the following types of goods will she consume less of?

• inferior goods

• normal goods

• complements

• substitutes

In July, an automobile company announces that next year’s models, with more features, will start to arrive in September or October. What is likely to happen to demand for this year’s model in August?

• Demand will rise in anticipation of higher prices for the current model.

• Demand will fall in anticipation of lower prices on the current model.

• Demand will stay the same and price will stay the same.

• Demand will go to zero because everyone will want the new model.

How is profit determined?

• marginal revenue plus marginal cost

• marginal revenue minus marginal cost

• total revenue plus total cost

• total revenue minus total cost