Supply and Demand Equilibrium

Thousands of people leave a small town due to a factory closing down. Sales at the local grocery store are reduced. What causes this change?

• Prices or availability of substitutes

• Prices or availability of complementary goods

• Change in the weather or season

• Change in the number of buyers

New technology advances the rate at which furniture can be assembled. Why does this change the supply?

• There is a change in cost of production.

• The number of producers changes.

• The expectations of consumers changes.

• The output rate declines.

Which of the following best refers to the market equilibrium price?

• Surpluses depress the number of goods supplied.

• Shortages and surpluses will have no effect on the market.

• The government will not intervene in the market.

• The quantity demanded is the same as the quantity supplied.

Mr Nunn goes to the ticket booth to buy tickets for a Hawks game. Mr. Nunn is told that the game is sold out and no tickets are available. Which best explains why there are no basketball tickets available?

• The arena forgot to print enough tickets.

• The supply of tickets was greater than the demand.

• The arena charged too much money for each ticket.

• The demand for tickets was greater than the supply.

Which statement expresses a central idea of how the laws of supply and demand work?

• The government sets the prices for goods and services.

• Prices are determined by the interaction of producers and consumers.

• Consumers alone determine the prices for goods and services.

• Technology dictates the prices charged for goods and services.

Which situation is most likely to lead to the lowest prices?

• There is only one producer making the good.
• Businesses secretly agree to share their profits.
• Competition between businesses is prohibited.
• Several producers compete to sell goods to the public.

When companies compete in a market economy, what is usually the result?

• Consumers are able to buy goods for the best available price.
• People pay much higher prices for goods.
• There are frequent shortages of goods on the market.
• Producers refuse to sell some of their products.

Which of the following would NOT be a determinant of demand?

• The price of related goods

• Income

• Tastes

• The prices of the inputs used to produce the good

If the price of a substitute to good X increases, then

• The demand for good X will increase.

• The market price of good X will decrease.

• The demand for good X will decrease.

• The demand for good X will not change.

Suppose you like banana cream pie made with vanilla pudding. Assuming all other things are constant, you notice that the price of bananas is higher. How would your demand for vanilla pudding be affected by this?

• It would decrease.

• It would increase.

• It would be unaffected.

• There is insufficient information given to answer the question.