Demand and Supply Review

Because of diminishing marginal utility, you would be willing to pay less for the fourth slice of pizza than for the first.

• True

• False

In equilibrium, market forces exert upward pressure to change price or quantity.

• True

• False

If the price elasticity of demand, or supply, is greater than one, then it is considered unit inelastic.

• True

• False

To eliminate a surplus of a product, producers must lower the price. Thus, a surplus puts downward pressure on the price.

• True

• False

A shortage occurs when the quantity supplied fails to meet the quantity demanded.

• True

• False

An decrease (shift to the left) of the demand curve for pizza will…

• cause the supply curve for pizza to shift to the right.

• cause the price of pizza to fall.

• cause the supply curve for pizza to shift to the left.

• cause the quantity of pizza supplied to decline.

If the cost of producing tennis balls increases…

• the supply curve for balls will shift to the right and their price will grow.

• the supply curve for balls will shift to the left and their price will increase.

• the supply curve for balls will shift to the left and their price will grow.

• the supply curve for balls will shift to the left and their price will fall.

If a product's demand curve shifts to the left…

• its supply curve will remain unchanged, and the price will fall.

• its supply curve will shift to the left, and its price will remain the same.

• its supply curve will shift to the right, and its price will increase.

• its supply curve will remain unchanged, and the price will increase.

A market demand curve reflects the demand of…

• an individual consumer.

• all the consumers in a market.

• a single supplier.

• all suppliers in a market.

Which of the following are not examples of substitutes?

• Butter and margarine

• Milk and water

• Bread and butter

• Cookies and cake.