3
The Market at Work:
Supply and Demand
Practice What You Know—
Demand Quiz 2
• The following three questions
are considering the market for
the same good.
• The good in question is
PEPSI.
• We are considering:
– Change in quantity demanded
(movement), and
– Change in demand (shift).
Practice What You Know—
Demand Quiz 2
• Assume you like Pepsi, and your income increases.
A.
B.
C.
D.
The demand for Pepsi increases.
The demand for Pepsi decreases.
The quantity demanded for Pepsi increases.
The quantity demanded for Pepsi decreases.
Practice What You Know—
Demand Quiz 2
• Assume the price of Pepsi decreases.
A.
B.
C.
D.
The demand for Pepsi increases.
The demand for Pepsi decreases.
The quantity demanded for Pepsi increases.
The quantity demanded for Pepsi decreases.
Practice What You Know—
Demand Quiz 2
• Assume the price of Coke decreases.
A.
B.
C.
D.
The demand for Pepsi increases.
The demand for Pepsi decreases.
The quantity demanded for Pepsi increases.
The quantity demanded for Pepsi decreases.
Practice What You Know—
Supply Quiz
• Assume the price of cheese decreases. What will
happen in the pizza market?
A.
B.
C.
D.
The supply of pizza increases.
The supply of pizza decreases.
The quantity supplied of pizza increases.
The quantity supplied of pizza decreases.
Practice What You Know—
Supply Quiz
• Which of the following will cause the supply curve
for oranges to shift to the left?
A.
B.
C.
D.
The government begins subsidizing orange growers.
A study showing oranges improve eyesight
Ice storm strikes Florida
A new orange juice commercial airs on TV.
Practice What You Know—
Supply Quiz
• In general, why would the
government enact tougher
pollution standards or tax a
polluting firm?
A. Pollution is bad!
B. Political reasons
C. Encourage the firm to invest in cleaner production
methods
D. All of the above
Practice What You Know
Suppose the price of good X increases. In
terms of demand, what is the result?
A.
B.
C.
D.
The demand for X increases.
The demand for X decreases.
The quantity demanded of X increases.
The quantity demanded of X decreases.
Practice What You Know
Suppose goods X and Y are substitutes for
each other. If the price of good Y increases,
what is the result in the market for good X?
A.
B.
C.
D.
The demand for X increases.
The demand for X decreases.
The quantity demanded of X increases.
The quantity demanded of X decreases.
Practice What You Know
• Suppose there is a shortage in the market for
avocados. Assuming a competitive and
unrestrained market, what happens over time?
A. The price of avocados will fall, and the shortage
will worsen.
B. The price of avocados will rise, and the market
will eventually reach equilibrium.
C. The price of avocados will rise, and a large
surplus will be created.
D. Producers will stop growing avocados.
Practice What You Know
Consider the market for bananas. Suppose
that both the supply and demand for bananas
increases simultaneously. Which of these
effects is certain?
A. The equilibrium price of bananas will increase.
B. The equilibrium price of bananas will decrease.
C. The equilibrium quantity of bananas will
increase.
D. The equilibrium quantity of bananas will
decrease.
Practice What You Know
Which of the following will most likely cause a
decrease in the supply of most fruits and
vegetables?
A. an increase in demand for meat
B. the introduction of an environmentally friendly
pesticide
C. a decrease in the price of corn and rice
D. harsh punishments for farmers that hire
undocumented workers