Supply and Demand Review

When the price of a product increases, there is

• a shift in demand.

• movement along the demand curve.

• a change in elasticity of demand.

• no effect on quantity demanded.

On the demand curve, price and quantity demanded are

• inversely related.

• directly related.

• unrelated.

• not relevant.

During the Dust Bowl of the 1930’s, many farmers’ agricultural goods were destroyed. What happened

to the market for agricultural goods?

• Increase in demand

• Decrease in demand

• Increase in supply

• Decrease in supply

What is the Law of Supply?

Which of the following explains the Law of Demand?

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

• When the price of a good increases, people tend to buy substitutes instead.

• People prefer inferior goods during a recession.

• People often buy eggs and bacon together.

Which of the following pairs of goods are substitutes?

• Jelly & Jam

• Eggs & Bacon

• Apples & Broccoli

• Mugs & Candles

Which of the following pairs of goods are complements?

• Jelly & Jam

• Eggs & Bacon

• Apples & Broccoli

• Mugs & Candles

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.

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

happen to the demand for peanut butter?

• It will decrease.

• It will increase.

• It will remain constant.

• Complementary goods only affect the supply curve.

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 expectations.

• It will increase due to cost of inputs.

• It will decrease due to cost of inputs.