Supply and Demand

A curve indicating the quantities that buyers are willing to purchase at various prices is known as a ___________ curve.

• demand

• supply

• budget constraint

• upwardslopping

There are ten restaurants in your town. On a given night, each restaurant has the ability to produce up to twenty full course dinners at a price of $20 each. What is the total market supply of full course dinners tonight, at a price of $20?

• 20

• 200

• 400

• 4000

The demand curve for a good shows the same information as the demand schedule

• true

• false

Assume that sofas and arm chairs are substitute goods. The graph shown above illustrates the demand curve for sofas. Which of the following events could have triggered the shift in demand from D1 to D2?

• The price of sofas increased

• The price of armchairs increased

• The price of sofas decreased

• The price of armchairs decreased

Which of the following is an example of movement along a supply curve?

• quantity of apples offered for sale increases as the price of apples rises

• price of pears doubles, increasing demand for apples

• price of fertilizer increases, making it more expensive to produce apples

• thanks to good weather conditions, apple growers enjoy a bumper crop

Which of the following is not an example of a “nonprice determinant of supply” of handmade rugs?

• Available technology for making rugs

• The price of looms for weaving rugs

• Number of rug producers

• Price of handmade rugs

Which one of the following would be most likely to increase (shift to the right) the demand for public transportation?

• Increasing the frequency of bus stops

• Higher gasoline prices

• Lower fares for bus tickets

• Lower automobile prices

When the supply of a good increases (shift to the right), what happens to equilibrium price and quantity?

• Price increases, quantity decreases

• Price decreases, quantity increases

• They both decrease

• The effect is ambiguous

At the end of a hot day, ten people want to buy a glass of lemonade. However, the local lemonade stand only has five glasses of lemonade left. The lemonade stand operator sells the remaining five glasses to the five people who are willing and able to pay the most. This is an example of …

• a surplus

• rationing by price

• disequilibrium

• a shift in the demand curve

• a lottery

A bike shop in a small town has received a shipment of 10 new bicycles. The shop offers the bikes for sale at a price of $300 each. At this price, however, there are only two people in town who are willing to buy a bicycle. This situation can be described as

• shortage

• surplus

• equilibrium

• disequilibrium