Supply and Demand Test Practice

The demand curve represents the behavior of

• a. consumers.
• b. producers.
• c. consumers and producers.
• d. laborers.

Which of the following summarizes the law of demand?

• a. When the price of a product is higher, more consumers will purchase the product.
• b. Inflation causes higher prices.
• c. When the price of a product is lower, consumers will purchase more of that product.
• d. Investors only care about profit.

Which summarizes the law of supply?

• a. When the price is lower, producers will produce more of that product.
• b. When the price is higher, producers will produce more of that product.
• c. When consumer demand is high, producers will produce a lot of products.
• d. Supply is constantly in a state of change.

Which of the following will result in an increase in demand due to consumer expectations?

• a. Consumers think it will be a cold winter, so they buy more blankets.
• b. Producers think it will be a warm summer, so they produce more swimsuits.
• c. Consumers suddenly love neon, so they buy more neon shoes.
• d. Consumer income rises so people buy fewer inferior goods.

The supply curve represents the behavior of

• a. consumers.
• b. producers.
• c. consumers and producers.
• d. laborers.

If the price of peanut butter decreases, then what will happen to the demand for jelly?

• a. There will be a decrease in demand for jelly.
• b. There will be an increase in demand for jelly.
• c. There will be an increase in demand for peanut butter.
• d. There will be no change to the demand curve for jelly.

What two effects help explain the downward sloping shape of the demand curve?

• a. Substitute and Complement Effects
• b. Normal and Inferior Effects
• c. Supply and Demand Effects
• d. Substitute and Income Effects

Which of the following scenarios would NOT shift the demand curve for picture frames?

• a. A decrease in the price of picture frames.
• b. A change in the price of printing photos.
• c. A celebrity promotes the wonders of picture frames.
• d. An increase in income for most picture frame purchasers.

For a normal good, when the consumer income of an economy decreases,

• a. fewer consumers will purchase that product.
• b. more consumers will purchase that product.
• c. the demand of that product will not change.
• d. none of the above are true.

On the demand curve, price and quantity demanded are

• a. decreasing simultaneously.
• b. both measured on the x-axis.
• c. directly related.
• d. indirectly (inversely) related.