Understanding Supply and Demand

What happens to the supply curve when there is an improvement in production technology?

• The supply curve shifts to the left.

• The supply curve shifts to the right.

• The supply curve becomes vertical.

• The supply curve remains unchanged.

Which of the following is a determinant of demand?

• Production costs

• Consumer income

• Number of suppliers

• Technology

If the price of a substitute good increases, what is likely to happen to the demand for the original good?

• Demand for the original good will decrease.

• Demand for the original good will increase.

• Demand for the original good will remain unchanged.

• Demand for the original good will fluctuate randomly.

What is the law of supply?

• As the price of a good increases, the quantity supplied decreases.

• As the price of a good increases, the quantity supplied increases.

• As the price of a good decreases, the quantity supplied increases.

• The quantity supplied is not affected by the price.

What is a shortage in economic terms?

• When quantity demanded exceeds quantity supplied

• When quantity supplied exceeds quantity demanded

• When supply and demand are equal

• When there is no supply of a product

Which of the following scenarios would likely cause a decrease in the demand for a product?

• An increase in consumer income for a normal good

• A decrease in the price of a complementary good

• An increase in the price of a substitute good

• A decrease in consumer income for a normal good

What is the effect of a government-imposed price floor on the market equilibrium?

• A price floor set above equilibrium price causes a surplus.

• A price floor set below equilibrium price causes a surplus.

• A price floor set above equilibrium price causes a shortage.

• A price floor set below equilibrium price causes a shortage.

What is the effect of an increase in the cost of raw materials on the supply curve?

• The supply curve shifts to the left.

• The supply curve shifts to the right.

• The supply curve becomes vertical.

• The supply curve remains unchanged.

What is the primary difference between a change in quantity demanded and a change in demand?

• A change in quantity demanded is a movement along the demand curve, while a change in demand is a shift of the demand curve.

• A change in quantity demanded is a shift of the demand curve, while a change in demand is a movement along the demand curve.

• Both involve shifts of the demand curve.

• Both involve movements along the demand curve.

If a product has an elastic demand, what happens to total revenue when the price decreases?

• Total revenue increases.

• Total revenue decreases.

• Total revenue remains unchanged.

• Total revenue fluctuates randomly.