Unit 2 Supply and Demand

Evelyn went to the supermarket to buy some groceries. She noticed some changes in the prices of the items she usually buys. Which of the following observations is consistent with the law of demand?

• A decrease in the price of a gallon of milk causes Benjamin to buy less milk than before.

• James buys less soda than before when the price of a soda increases.

• An increase in the price of a tape causes Evelyn to buy more tapes than before.

• Despite a decrease in the price of juice, Benjamin's purchase quantity of juice remains the same.

Hannah gets a promotion at her job and decides to buy gourmet pasta from a high-end store instead of the cheaper instant noodles she usually gets from the supermarket. Which phrase describes what instant noodles are for Hannah?

• unitary elastic

• complements

• market demand

• inferior goods

On a hot summer day, James, Rohan, and Avery decide to play a game of basketball. After the game, they quickly drink 3 bottles of Gatorade each. James drank his first bottle very quickly, but the third one was MUCH slower. What does this illustrate?

• Substitution Effect

• Law of Diminishing Marginal Utility

• Law of Supply

• Law of Elasticity

Nora is at a store and sees a dress she likes. What does it mean when Nora has demand for the dress?

• Nora can afford the dress but may be unwilling to buy it. No sale

• Nora wants the dress but may not have the money for it. No sale

• Nora is able to buy the dress but not at the given price. No sale

• Nora is willing and able to buy the dress at the given price. Sale

Aria, Elijah, and Noah are running a lemonade stand. When would it make sense for their stand, which is currently losing money, to remain in operation?

• If the money they earn per cup of lemonade (marginal revenue) is equal to the cost to make each cup (marginal cost).

• If the total cost of the lemons, sugar, and cups (goods being manufactured) exceeds the cost of running the stand (operating cost).

• If the amount of lemonade they can make with each additional worker (marginal product of labor) becomes negative.

• If the total money they earn from selling lemonade (total revenue) exceeds the cost of running the stand (operating cost).

Liam, William, and Charlotte are running a small business. They decided to specialize in their respective roles. How does this specialization affect their production?

• It increases their cost.

• It makes them more efficient in their roles.

• It decreases their revenue.

• It slows down their production.

Imagine Aiden is the government and he decides to increase the production of apples in his farm. What happens to the supply curve of apples?

• It shifts to the left, supply decrease.

• It shifts to the right, supply increase.

• It reverses direction.

• The supply curve is not affected.

Harper, Ava, and Nora are running a lemonade stand. They are trying to understand how supply and demand determine the equilibrium price and quantity. They noticed that when they change the price of their lemonade, the quantity they sell also changes. Based on their observations, they concluded that the equilibrium price and quantity of their lemonade is

• $35, 125 cups of lemonade

• $3, 60 cups of lemonade

• $0.25, 60 cups of lemonade

• $1.25, 35 cups of lemonade

Emma, Kai, and Evelyn are running a donut shop. They are trying to find the perfect price for their donuts to balance supply and demand. Based on their market research, what would be the equilibrium price of their donuts?

• $10

• $20

• $25

• $30

• $35

What will happen if Henry's bakery starts selling donuts at $35 a dozen?

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

• A shortage exists and the price rises to restore equilibrium.

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

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

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