ECO2013: Chapter 04 Practice Quiz: The Market Forces of Supply and Demand

A perfectly competitive market has ________.

many buyers and sellers

If an increase in the price of chicken leads to an increase in the demand for fish, then chicken and fish are ________.

substitutes

The law of demand states that an increase in the price of a good ________.

decreases the quantity demanded for that good

The law of supply states that an increase in the price of a good ________.

increases the quantity supplied of that good

If an increase in consumer incomes leads to a decrease in the demand for hamburger, then hamburger is ________.

an inferior good

A monopolistic market has ________.

only one seller

Which of the following shifts the demand for pizza to the right?

a decrease in the price of soda if soda and pizza are complements

All of the following shift the supply of smartphones to the right except ________.

an increase in the price of smartphones

If the price of a good is above the equilibrium price, ________.

there is a surplus and the price will rise

If the price of a good is below the equilibrium price, ________.

there is a shortage and the price will rise

If the price of a good is equal to the equilibrium price, ________.

the quantity demanded is equal to the quantity supplied and the price remains unchanged

An increase (rightward shift) in the demand for a good will tend to cause ________.

an increase in the equilibrium price and quantity

A decrease (leftward shift) in the supply for a good will tend to cause ________.

an increase in the equilibrium price and a decrease in the equilibrium quantity

Suppose there is an increase in both the supply and demand for laptop computers. In the market for laptops, we would expect the ________.

equilibrium quantity to rise and the change in the equilibrium price to be ambiguous

Suppose there is an increase in both the supply and demand for laptop computers. Furthermore, suppose the supply of laptops increases more than demand for laptops. In the market for laptops, we would expect the ________.

equilibrium quantity to rise and the equilibrium price to fall

Which of the following statements is true about the impact of an increase in the price of lettuce?

the equilibrium price and quantity of salad dressing will fall

Suppose a frost destroys much of the Washington apple crop. At the same time, suppose consumer tastes shift toward apple juice. What would we expect to happen to the equilibrium price and quantity in the market for apple juice?

Price will increase; quantity is ambiguous.

Suppose consumer tastes shift toward the consumption of coffee. Which of the following statements is an accurate description of the impact of this event on the market for coffee?

There is an increase in the demand for coffee and an increase in the quantity supplied of coffee.

Suppose both buyers and sellers of corn expect the price of corn to rise in the near future. What would we expect to happen to the equilibrium price and quantity in the market for corn today?

Price will increase; quantity is ambiguous

An inferior good is one for which an increase in income causes a(n) ________.

decrease in demand