Economics 809-195
Practice questions
Chapter Three
Please circle correct letter.
Student’s Name____________________
Date:__________-__________________
Class No._________________________
1. The meaning of demand is
A) how badly someone wants a good.
B) the quantities of a good that people will buy at various prices.
C) the quantities of a good that people will provide at various prices.
D) the total satisfaction that consuming a good provides people at different prices.
2. Which of the following is an example of the law of demand?
A) A decrease in the price of milk is followed by an increase in milk sales.
B) A decrease in the price of milk is followed by a decrease in milk sales.
C) An increase in the price of milk has no effect on the amount of milk purchased.
D) The amount of milk purchased increases when the price is constant.
3. When two goods are used together for consumption or enjoyment they are
A) substitute goods.
B) complementary goods.
C) inferior goods.
D) satisfying the law of supply.
4. Mary decreases her consumption of Good X after the price of Good Y decreased. For
Mary
A) Good X and Good Y are substitutes.
B) Good X and Good Y are complements.
C) Good X is an inferior good.
D) Good Y is an inferior good.
5. According to the law of supply
A) people buy more of a good when the price increases.
B) people buy more of a good when the price decreases.
C) producers provide more of a good when the price increases.
D) producers provide more of a good when the price decreases.
Table 3.2
Price
Supplier 1
Quantity Supplied
(thousands)
8
7
6
5
11
8
5
2
Supplier 2
Supplier 3
Quantity Supplied Quantity Supplied
(thousands)
(thousands)
7
6
5
4
20
15
10
5
6.
Refer to the above table. The market supply when the price is $6 is
A) 0
B) 5
C) 10
D) 20
7.
An increase in supply will occur when
A) the supply curve shifts downward to the right.
B) the supply curve shifts upward to the left.
C) the demand curve shifts downward to the left.
D) the demand curve shifts upward to the right.
Figure 3.5
8.
Refer to the above figure. The rightward shift of the curve indicates
A) an increase in demand.
B) an increase in supply.
C) a change in quantity demanded.
D) a change in quantity supplied.
Figure 3.6
9.
Refer to the above figure. Moving from point A to point B indicates
A) An increase in supply.
B) An increase in quantity supplied.
C) A decrease in supply.
D) A decrease in quantity supplied.
10. A shortage exists
A) in equilibrium.
B) when quantity supplied is greater than quantity demanded.
C) when quantity supplied is less that quantity demanded.
D) at the market clearing price.
11. Another name for a surplus is
A) excess supply.
B) excess demand.
C) equilibrium.
D) market clearing.
Table 3.3
Price
Supplied
Per TV
$800
750
700
650
600
550
500
450
400
Quantity Demanded
Quantity
Per Month
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
Per Month
12,000
11,000
10,000
9,000
8,000
7,000
6,000
5,000
4,000
12.
Refer to the above table. The equilibrium price for TVs is
A) $500.
B) $550.
C) $650.
D) $700.
13. Increases in consumers’ income will lead to
A) change in supply.
B) change in demand.
C) change in quantity demanded.
D) unstable market.
14.-15. Using a graph, show a market equilibrium. Suppose the costs of inputs increase.
How is this shown on the graph? Explain what is happening in the market.
14. Illustrate graph here: (draw out)
15. Explain in words here: