Supply & Demand Unit Exam

On a demand curve, how do price and quantity demanded interact?

• a. They move in opposite directions

• b. They move in the same direction

• c. They are independent of each other

• d. They are irrelevant

When the price of a product decreases, there is

• a. a shift in supply.

• b. only an increase in quantity demanded.

• c. a change in consumer preferences.

• d. no effect on quantity demanded.

What does the Law of Supply state?

• a. When demand increases, supply decreases.

• b. Supply shifts to the left due to technology.

• c. When price decreases, quantity supplied decreases.

• d. When price increases, quantity supplied increases.

5. Which of the following is one explanation for why the Law of Demand occurs?

• a. When prices increase, people have an increased income.
• b. When the price of a good increases, people tend to buy substitutes instead.
• c. People prefer normal goods during a recession.
• d. Suppliers are always trying to take advantage of consumers.

Which of the following pairs of products are considered substitutes in economics?

• a. Tea & Coffee

• b. Bread & Butter

• c. Shoes & Socks

• d. Pens & Notebooks

Which condition indicates that a market is in equilibrium?

• a. The quantity demanded exceeds the quantity supplied.

• b. The quantity supplied exceeds the quantity demanded.

• c. The quantity demanded equals the quantity supplied.

• d. There is no demand or supply in the market.

Which of the following pairs of goods are often used together?

• a. Peanut Butter & Jelly

• b. Coffee & Tea

• c. Socks & Sandals

• d. Plates & Napkins

Assume coffee and sugar are complementary goods. When the price of sugar increases, what will happen to the demand for coffee?

• a. It will decrease.

• b. It will increase.

• c. It will remain constant.

• d. Complementary goods only affect the supply curve.

10. Who is mainly responsible for what is produced in a free market economy?

• a. Governments
• b. Millionaires
• c. Producers
• d. Consumers

Which scenario describes a market surplus?

• a. When the amount producers want to sell exceeds the amount consumers want to buy.

• b. When the amount producers want to sell is less than the amount consumers want to buy.

• c. When the amount producers want to sell matches the amount consumers want to buy.

• d. When there is no production or consumption in the market.