Name: _______________________ Date:______________ Teacher: Crumedy Period:_____
Unit 3 Exam – Supply and Demand
Multiple Choice: Choose the best answer choice
1. For most products and services, increased price results in
a. Demand for fewer products
b. Demand for more products
c. Reduced demand for substitutes
d. Increased demand for compliments
2. An increase in the price of milk causes a decrease in demand in cereal. The two products are
a. Substitutes
c. unrelated
b. Compliments
d. demand elastic
3. Advertising, fashion trends, and new product introductions serve to
a. Create consumer needs
b. Increase income effectiveness
c. Create consumer demand
d. Minimize the income effect
4. A demand schedule shows
a. An upward – sloping curve that illustrates the positive relationship between prices and
quantity demanded.
b. A listing of the various quantities demanded of a particular product at all prices that
might prevail in the market
c. The fluctuations in demand that occurred over a specified period of time
d. The fluctuations in demand scheduled to occur over the following year
5. Consumer’s willingness to replace a costly item with a less costly item is an example of
a. The substitution effect
c. Demand elasticity
b. The income effect
d. Complements
6. An increase in the price of cameras results in a decrease in the demand for film. The two
products are
a. Substitutes
c. Unrelated
b. Demand elastic
d. Complements
7. When a customer’s need for a product is not urgent, demand tends to be
a. Inelastic
c. Complementary
b. Elastic
d. Unit elastic
8. When a manufacturer of pain medication reduced the price of medication by 30%, profits
declined by almost exactly 30%. Demand for the product is
a. Inelastic
c. unit elastic
b. Elastic
d. complementary
9. The supply of a product normally decreases if
a. The cost of inputs goes down
b. More producers enter the market
c. The price of the product increases
d. Taxes on the product increase
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Name: _______________________ Date:______________ Teacher: Crumedy Period:_____
10. Total cost is the sum of the
a. Fixed costs of inputs goes down
b. All variable cost
c. Fixed and variable costs
d. Fixed and marginal costs
11. The theory of production deals with the relationship between the factors of production and
a. The cost of raw materials
b. The cost of marginal returns
c. Fixed costs
d. The output of goods and services
12. Rent payments and property taxes would be counted as
a. Total cost
b. Variable cost
c. Fixed costs
d. Marginal costs
13. When demand decreases, the demand curve shifts to the
a. Left
b. Right
14. The _____________ demand curve is the sum of all individual demand curves.
a. Total expenditures
c. Market
b. Proportional
d. Complement
15. When a consumer’s need for a product is urgent and cannot be put off, demand for the product is
usually
a. Elastic
c. Complementary
b. Inelastic
d. Demand sensitive
16. The ___________________ test can be used to estimate demand elasticity.
a. Total expenditures
c. Complementary
b. Elasticity
d. Inelastic
17. When a purchase requires a large portion of income, demand for the product is usually
a. Elastic
c. Complementary
b. Inelastic
d. Demand sensitive
18. Demand _____________ relates changes in quantity demanded to changes in price.
a. Elastic
c. Complementary
b. Inelastic
d. Elasticity
19. Demand is unit elastic if a change in price causes a _____________ change in quantity
demanded.
a. Proportional
b. Disproportional
20. Because of the _____________ effect, you’ll feel wealthier if the price of entertainment drops.
a. Elastic
c. Inelastic
b. Income
d. Complementary
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Name: _______________________ Date:______________ Teacher: Crumedy Period:_____
21. Hotdogs and buns are ________ because they are used together.
a. Elastic
c. Complementary
b. Inelastic
d. Market
22. The ________ shifts to the left if demand for a product decreases.
a. Demand curve
c. Market demand
b. Supply curve
d. Elasticity curve
23. Beef and pork are ____________ because they can be used in place of each other.
a. Substitutes
c. Inelastic
b. Complements
d. Elastic
24. The demand for prescription medicine is generally __________ because people must have it, and
they will purchase it in the same amount whether the price goes up or down.
a. Elastic
c. Complementary
b. Inelastic
d. Market
25. You create ___________ for a product when you wish to purchase it and have the money to do
so.
a. Supply
c. Market curve
b. Demand
d. Supply curve
26. The three stages of production are: increasing returns, _______________ returns, and negative
returns.
a. Gaining
c. Diminishing
b. Loss
d. Elastic
27. The theory of production deals with the relationship between ________________ and the output
of goods and services.
a. Factors of production
c. Demand curves
b. Elasticity
d. Supply curves
Matching: Match the descriptions with the correct term.
a. Subsidy
b. Law of Demand
c. Elasticity
d. Microeconomics
e. Raw Materials
28. A measure of responsiveness that shows how a dependent variable responds to a change in an
independent variable.
29. Field of economics that deals with behavior and decision making by small units
30. States that the quantity demanded of a product varies inversely with its price
31. Government payment to encourage or protect an economic activity
32. Unprocessed natural products used in production
True or False: Mark “A” if the statement is true and “B” if the statement is false.
33. _____ A demand curve illustrates the quantity demanded at all possible prices at a given time
34. _____ A demand schedule is created from a demand curve
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Name: _______________________ Date:______________ Teacher: Crumedy Period:_____
35. _____ The Law of Demand states that more of a product will be purchased at low prices than at
high ones
36. _____ Productivity will decrease if workers are unmotivated
37. _____ The Law of Supply states that suppliers will normally offer less for sale at a higher prices
and more for sale at lower prices
38. _____ The market supply curve shows the quantities offered at various prices by all firms that
offer the product for sale in a given market.
39. _____ The introduction of technology usually has no effect on supply.
40. _____ The four important measures of cost are: total cost, fixed cost, variable cost, and marginal
cost
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