Unit 2: Supply, Demand, and Price Test

Recently the price of a popular perfume has increased by $10. How will the price change likely affect the quantity demanded and supplied?

• A) Supply will stay the same, and demand will increase.

• B) Supply will decrease, and demand will increase.

• C) Supply will increase, and demand will decrease.

• D) Supply will increase, and demand will stay the same.

Maria raised the price of the most popular pair of jeans in her clothing store. Two weeks later, she was surprised to learn that she did not sell any jeans at the new price. Considering the law of demand, why did Maria sell fewer jeans when she increased the price?

• The quality of the jeans declined.

• The cost of producing the jeans increased.

• The market is slow to adjust to price changes.

• The consumers were less able or willing to pay.

Select ONE correct answer in each box to complete each sentence. According to the law of demand, the quantity demanded of a good will _________ when the price increases because consumers will _________.

• decrease; substitute with a similar good

• increase; substitute with a more expensive good

• remain the same; substitute with a less expensive good

• not buy; keep with brand loyalty

Use the market graph below to help answer the question.

What would be the effect of a price ceiling of $4 per pound of oranges?

• The quantity demanded will exceed the quantity supplied, resulting in a surplus of 4 pounds of oranges.

• The quantity demanded will exceed the quantity supplied, resulting in a shortage of 4 pounds of oranges.

• The quantity supplied will exceed the quantity demanded, resulting in a surplus of 4 pounds of oranges.

• The quantity supplied will exceed the quantity demanded, resulting in a shortage of 4 pounds of oranges.

This scenario is an example of how a shift in demand can be created by —

• higher prices

• profit motive

• laissez-faire policies

• a non-price determinant

Which of the following is a non-price determinant of demand?

• Subsidy

• Productivity

• Price ceiling

• Consumer preferences

On a supply and demand graph, supply will decrease and shift to the left when which of the following happens?

• The number of firms leaving the industry increases. 

• There are fewer government regulations in place. 

• The total cost of inputs decreases. 

• Production taxes decline over a short period of time. 

Which of the following would most likely cause the shift shown on the graph?

• The cost of parts for cell phones has gone up.

• The cell phone company made a large profit this year.

• Cell phone salesmen are working overtime to sell phones.

• A new, popular model of cell phone just came on the market.

Which non-price determinate is sometimes utilized by the government to decrease demand for a product that is viewed as harmful to society?

• Subsidies.

• Rationing.

• Excise taxes. 

• Consumer boycotts. 

Which of the following conditions could explain the shift in the demand curve shown on the graph?

• Farmers harvested a bumper crop of tomatoes.

• Shoppers learned that cans of cooked tomatoes are spoiled.

• Surveys found that people are eating more cooked tomatoes.

• Eating cooked tomatoes was found to have more health benefits.