Demand and Supply

What causes a movement along the demand curve?

• Change in income
• Change in consumer taste
• Change in the good’s price
• Change in number of buyers
• Change in related goods' prices

If the price of coffee increases and people buy more tea, tea is considered a:

• Inferior good
• Substitute good
• Complement good
• Giffen good
• Luxury good

What happens when the market price is above equilibrium?

• Shortage
• Demand increases
• Supply increases
• Surplus
• Supply decreases

When income rises and demand for a good decreases, the good is:

• Normal
• Luxury
• Complementary
• Inferior
• Substitute

What is the likely effect on the demand curve if a product becomes a trend?

• Movement along the curve
• Rightward shift
• Leftward shift
• Becomes steeper
• No effect

An increase in the price of sugar will likely affect the supply of candy by:

• Shifting supply curve right
• Shifting supply curve left
• Moving along the supply curve
• Increasing equilibrium quantity
• No effect

If demand is inelastic, an increase in price will:

• Decrease revenue
• Not affect revenue
• Increase revenue
• Double revenue
• Have uncertain effect

Price elasticity of demand measures:

• The slope of demand curve
• Responsiveness of demand to price changes
• The impact of taxes on demand
• Market equilibrium price
• Substitution effect only

If both supply and demand decrease, what happens to equilibrium quantity?

• Increases
• Decreases
• Stays constant
• Increases then decreases
• Cannot be determined

What is likely if a price ceiling is below equilibrium price?

• Market clears
• Surplus
• Equilibrium persists
• Shortage
• Demand decreases