Supply and Demand Unit Assessment

1. When the price of a product increases, there is

• a. a shift in demand.
• b. movement along the demand curve.
• c. a change in elasticity of demand.
• d. no effect on quantity demanded.

2. On the demand curve, price and quantity demanded are

• a. inversely related.
• b. directly related.
• c. unrelated.
• d. not relevant.

3. During the Dust Bowl of the 1930’s, many farmers’ agricultural goods were destroyed. What happened to the market for agricultural goods?

• a. Increase in demand
• b. Decrease in demand
• c. Increase in supply
• d. Decrease in supply

4. What is the Law of Supply?

• a. When demand goes up, supply decreases.
• b. Supply shifts to the right due to technology.
• c. When price increases, quantity supplied decreases.
• d. When price increases, quantity supplied increases.

5. Which of the following explains the Law of Demand?

• a. When prices go down, people have an increased income.
• b. When the price of a good increases, people tend to buy substitutes instead.
• c. People prefer inferior goods during a recession.
• d. People often buy eggs and bacon together.

6. Which of the following pairs of goods are substitutes?

• a. Jelly & Jam
• b. Eggs & Bacon
• c. Apples & Broccoli
• d. Mugs & Candles

7. Which of the following pairs of goods are complements?

• a. Jelly & Jam
• b. Eggs & Bacon
• c. Apples & Broccoli
• d. Mugs & Candles

8. When consumer income decreases,

• a. demand for normal goods increases.
• b. demand for normal goods stays constant.
• c. demand for inferior goods increases.
• d. supply for inferior goods increases.

9. Assume peanut butter and jelly are complementary goods. When the price of jelly increases, what will happen to the demand for peanut butter?

• a. It will decrease.
• b. It will increase.
• c. It will remain constant.
• d. Complementary goods only affect the supply curve.

10. The cost of wood increases sharply. What happens to the supply for pencils?

• a. It will increase due to producer expectations.
• b. It will decrease due to producer expectations.
• c. It will increase due to cost of inputs.
• d. It will decrease due to cost of inputs.