Supply and Demand

If demand is elastic, _____.

• a. the demand curve will shift to the right
• b. the price effect is weak
• c. the demand curve will shift to the left
• d. the price effect is strong

A person buys a new car, but does not buy a second one. This illustrates _____.

• a. movement along the demand curve
• b. a shift in demand
• c. diminishing personal value
• d. a change in demand

If demand is inelastic, _____.

• a. the quantity demanded rises as the price goes up
• b. the price effect is strong
• c. the price effect is weak
• d. the quantity demanded goes down as the price falls

“The quantity demanded varies inversely with the price” is known as the law of demand.

• True
• False

Which is not a reason for a shift in demand?

• a.  The season or holiday has passed.
• b. People expect a change in the future.
• c. Peoples’ taste and styles change.
• d. Diminishing personal value

Demand is inelastic if many people choose not to buy because of price.

• True 
• False

If the price for fish rises in the supermarket, _____.

• a. the demand curve for fish will shift to the right
• b. the demand curve for fish will shift to the left
• c. the quantity of beef sold will rise
• d. the quantity of beef sold will fall

Suppose the cost of sugar and all the other ingredients of donuts rise sharply and the marginal cost increases.  As a result, ___.

• a.  each business would want to sell a larger quantity at every price shown, so the market supply would shift to the right
• b. each business would want to sell more donuts to maintain their profit
• c. each business would want to sell a smaller quantity at every price shown, so the market supply would shift to the left
• d. the market supply would remain unchanged

Why might a producer quit producing?

• a. The supply curve has become elastic.
• b. The marginal cost of producing the items is higher than the marginal return.
• c. The supply curve has become inelastic.
• d. The marginal return on the item is higher than the marginal cost of production.

Which is NOT an example of inelastic supply?

• a. Battle ship
• b. Jet
• c. Highway
• d. Calculator