ap econ supply and demand multiple choice review

D

The "law of demand" refers to the fact that, other things remaining the same, when the price of a good rises.

A.)The demand curve shifts rightward.

B.) The demand curve shifts leftward.

C.) There is a movement down along the demand curve to a larger quantity demanded.

D. )There is a movement up along the demand curve to a smaller quantity demanded.

E. )The demand curve shifts rightward and there is a movement up along the demand curve to a smaller quantity demanded.

D

Gasoline prices increases by 50 percent and other things remain the same. As a result, there is

A.) An increase in the demand for gasoline.

B.) A decrease in the demand for gasoline.

C.) No change in the quantity of gasoline demanded.

D.) A decrease in the quantity of gasoline demanded.

E.) More information is needed to determine if the demand for gasoline increases or decreases.

A

3Which of the following is true regarding demand?

i.) Demand is the relationship between quantity demanded and the price of a good when all other influences on buying plans remain the same.

ii.) Demand refers to one quantity at one time.

iii.) "Demand" and "quantity demanded" are the same thing.

A. i only

B. ii only

C. both i and ii

D. iii only

E. both ii and iii

c

A demand schedule

A. Shows the quantity demanded at one price.

B. Is a graph showing a relationship between the quantity demanded and the price of a good.

C. Is a list of the quantities demanded at each different price when all other influences on buying plans remain the same.

D. Shows that demand is on schedule.

E. Shows how the demand changes when the supply changes.

d

A demand curve

A. Has a upward slope.

B. Has a downward slope.

C. Is a graph of the relationship between quantity demanded of a good and its price.

D. Both B and C.

E. Both A and C.

c

The market demand curve

A. Cannot show how quantity demanded changes in response to a change in price.

B. Cannot show a change in demand for a good.

C. Is the horizontal sum of individual demand curves.

D. Is the vertical sum of individual demand curves.

E. Is upward sloping.

b

Soda and hot dogs are complements for one another. If a shortage of carbonated water leads to an increase in the price of soda, then the

A. Demand for hot dogs increases.

B. Demand for hot dogs decreases.

C. Quantity of hot dogs demanded increases.

D. Quantity of hot dogs demanded decreases.

E. More information is needed to determine if the demand increases or decreases.

c

If income increases and the demand for bus rides decreases.

A. Bus rides are a normal good.

B. Consumers are behaving irrationality.

C. Bus rides are inferior good.

D. Bus rides are a substitute good.

E. Bus rides must be a complement good with some other good.

b

A student at New York University used to take the Redhound bus when she visited her grandmother in Boston. After graduating, although he bus fare and the plane fare were the same as they were when she was a student, with a well-paying job on Wall Street, she now takes the plane to Boston to visit her grandmother. For this student, travel by Redhound bus is

A. A normal good.

B. An inferior good.

C. A substitute good.

D. A compliment good.

E. A good with negative preferences.

c

The law of supply states that, other things remaining the same.

A. Demand increases when supply increases.

B. If the price of a good increases, firms buy less of it.

C. If the price of a good increases, the quantity supplied increases.

D. As people's income increase, the supply of goods increases.

E. If the price of a good increases, the supply increases.

d

Which of the following is true regarding supply?

i. Supply is the relationship between quantity supplied and the price of the good when at least one other influence on selling plans changes.

ii. Supply describes the market with one quantity and one price.

iii. Supply curves have a positive slope.

A. Only i.

B. Only ii.

C. Both I and ii.

D. Only iii.

E. Both I and iii.

c

When any influence on selling plans, other than the price of the good, changes there is a change in the

A. Demand for supply of that good.

B. Demand for the good and the quantity of the good supplied.

C. Supply of the good but not the demand for the good.

D. Quantity of the good supplied.

E. Demand for the good but not the supply of the good.

b

Oil refiners can refine a barrel of petroleum so that it yields either more home heating oil or more diesel fuel. If the price of diesel fuel falls, there is

A. An increase in the supply of home heating oil.

B. A decrease in the supply of home heating oil.

C. An increase in the quantity of home heating oil supplied.

D. A decrease in the quantity of home heating oil supplied.

E. An increase in the demand for home heating oil.

c

An increase in the number of fast-food restaurants

A. Raises the price of fast-food meals.

B. Increases the demand for fast-food meals.

C. Increases the supply for fast-food meals.

D. Increases the demand for substitutes for fast-food meals.

E. Increases both the demand and supply of fast-food meals.

d

Suppose over the next several years the productivity of firms producing electric cars improves dramatically. The advance in productivity leads to

A. A decrease in the supply of electric cars so that the supply curve shifts leftward.

B. A decrease in the supply of electric cars so that the supply curve shifts rightward.

C. An increase in the supply of electric cars so that the supply curve shifts leftward.

D. An increase in the supply of electric cars so that the supply curve shifts rightward.

E. No change in the supply of electric cars, only a change in the quantity supplied of electric cars.

d

Which of the following shifts the supply curve of popcorn leftward?

A. decrease in the price of popcorn

B. An increase in the price of popcorn

C. A technological development in the production of popcorn

D. A decrease in the number of popcorn suppliers

E. A decrease in the cost of producing popcorn

b

Market equilibrium occurs when

A. All markets become equal.

B. The quantity demanded equals the quantity supplied.

C. Opposing forces pull demand and supply apart.

D. Demand and supply move in opposite directions.

E. Demand and supply change so they are equal at all possible prices.

b

A surplus of cardboard boxes means that

A.At the current price of a cardboard box, the quantity demanded exceeds the quantity supplied.

B.At the current price of a cardboard box, the quantity demanded is less than the quantity supplied.

C.The current price of a cardboard box is less than the equilibrium price.

D.At the current price of a cardboard box, the quantity demanded equals the quantity supplied and the price will fall to restore the equilibrium.

E.More information is needed to determine if the price of cardboard boxes higher than, lower than, or equal to the equilibrium price.

c

Suppose the equilibrium price of oranges is $2.00 per pound. If the actual price is above the equilibrium price

A. A shortage exists and the price falls to restore equilibrium.

B. A shortage exists and price rises to restore equilibrium.

C. A surplus exists and the price falls to restore equilibrium.

D. A surplus exists and the price rises to restore equilibrium.

E. A surplus exists but nothing happens until either the demand or the supply changes.

c

If the price of carrots is below the equilibrium price, the

A. Quantity demanded of carrots exceeds the quantity supplied and a surplus exists.

B. Quantity supplied of carrots exceeds the quantity demanded and a surplus exists.

C. Quantity demanded of carrots exceeds the quantity supplied and a shortage exists.

D. Quantity supplied of carrots exceeds the quantity demanded and a shortage exists.

E. Quantity supplied of carrots equals the quantity demanded.

a

As a result of a problem with a type of tire manufactured by Firestone, the demand for Firestone tires decreased dramatically in 2000. This decrease in demand led to

A. Surplus of Firestone tires and downward pressure on the price of a Firestone tire.

B. Shortage of Firestone tires and downward pressure on the price of a Firestone tire.

C. Surplus of Firestone tires and upward pressure on the price of a Firestone tire.

D. More information is needed about whether the initial equilibrium price was where the quantity of Firestone tires actually equaled the quantity supplied before the problems became known.

d

Computer chips are a normal good. Suppose the economy slips into a recession so that income falls. As a result, the demand for computer chips _____ so that the price of a computer chip _____.

A. Increases, rises

B. Increases, falls

C. Decreases, rises

D. Decreases, falls

E. Decreases, does not change

c

In Great Britain, raising taxes on gasoline has increased the costs of supplying gasoline. As a result, the equilibrium quantity of gasoline _____ and the equilibrium price of gasoline _____.

A. Increases, rises

B. Increases, falls

C. Decreases, rises

D. Decreases, falls

E. Does not change, rises

b

Suppose that the price of flour used to produce bagels increases. Hence the equilibrium price of a bagel ______ and the equilibrium quantity _____.

A. Rises, increases

B. Rises, decreases

C. Falls, increases

D. Falls, decreases

E. Does not change, does not change

b

Kiwis and strawberries are substitutes for consumers. An increase in the price of a kiwi coupled with an increase in the number of strawberry growers _____ the equilibrium price of a pound of strawberries and _____ the equilibrium quantity of strawberries

A. Raises increases

B. Probably changes, but more information is needed to determine if it rises or falls; increases

C. Raises; probably changes, but more information is needed to determine if it increases or decreases

D. Lowers; probably changes, but more information is needed to determine if it increases or decreases

E. E. lowers; increases

b

Consider the market for turkeys. In the United States, because of Thanksgiving in the month of November,

A. There is a downward movement along the demand curve for turkeys.

B. There is an upward movement along the supply curve for turkeys

C. The supply curve of turkeys shifts rightward.

D. The demand curve for turkeys shifts leftward.

E. Neither the demand curve nor the supply curve, instead there is amovement along both curves.

a

Consider the market for wheat. If there is an improvement in harvesting technology,

A. The supply curve for wheat shifts rightward.

B. The demand curve for wheat shifts rightward.

C. There is a movement up along the demand curve.

D. The equilibrium price rises.

E. The demand curve for wheat shifts leftward.