Module 3 - Quiz

DEMAND and SUPPLY

Identify the letter of the choice that best completes the statement or answers the question.

1. An increase in quantity supplied might be caused by an increase in production costs.

a. True
b. False

2. If durian and jackfruit are substitutes, an increase in the price of durian will decrease the
demand for jackfruit.
a. True
b. False

3. If consumers expect the price of J.CO donuts to rise, there will be an increase in the demand
for J.CO donuts today.
a. True
b. False

4. Consumers buy more of normal goods as their incomes rise.

a. True
b. False

5. An increase in the price of steel will shift the supply of cars to the right.
a. True
b. False

6. When the price of a good is below the equilibrium price, it causes a surplus.
a. True
b. False

7. The market supply curve is the horizontal summation of the individual supply curves.
a. True
b. False

8. If there is a shortage of a good, then the price of that good tends to fall.
a. True
b. False
9. If marker and eraser are complements, an increase in the price of markers causes the
demand for erasers to decrease or shift to the left.
a. True
b. False

10. A price floor in a competitive market will result in persistent shortages of a product.
a. True
b. False

11. The law of demand states that an increase in the price of a good
a. increases the supply of that good.
b. decreases the quantity demanded for that good.
c. decreases the demand for that good.
d. increases the quantity supplied of that good.

12. The law of supply states that an increase in the price of a good
a. increases the quantity supplied of that good.
b. increases the supply of that good.
c. decreases the demand for that good.
d. decreases the quantity demanded for that good.

13. Which of the following shifts the demand for watches to the right?
a. an increase in the price of watches
b. a decrease in the price of watch batteries if watch batteries and watches are
complements
c. a decrease in consumer incomes if watches are a normal good
d. a decrease in the price of watches

14. If the price of a good is above the equilibrium price,

a. there is a surplus and the price will rise.
b. there is a shortage, and the price will fall.
c. there is a shortage, and the price will rise.
d. there is a surplus and the price will fall.

15. If the price of a good is below the equilibrium price,

a. there is a shortage and the price will rise.
b. there is a shortage and the price will fall.
c. there is a surplus and the price will rise.
d. there is a surplus and the price will fall.
16. An increase (rightward shift) in the demand for a good will tend to cause
a. an increase in the equilibrium price and quantity.
b. an increase in the equilibrium price and a decrease in the equilibrium quantity.
c. a decrease in the equilibrium price and an increase in the equilibrium quantity.
d. a decrease in the equilibrium price and quantity.

17. A decrease (leftward shift) in the supply for a good will tend to cause
a. an increase in the equilibrium price and quantity.
b. an increase in the equilibrium price and a decrease in the equilibrium quantity.
c. a decrease in the equilibrium price and an increase in the equilibrium quantity.
d. a decrease in the equilibrium price and quantity.

18. An inferior good is one for which an increase in income causes a(n)
a. decrease in supply.
b. increase in demand.
c. increase in supply.
d. decrease in demand.

19. A price floor means that:

a. inflation is severe in this particular market.
b. sellers are artificially restricting supply to raise price.
c. government is imposing a legal price that is below the equilibrium price.
d. government is imposing a legal price that is above the equilibrium price.

20. A price ceiling means that:

a. inflation is severe in this particular market.
b. sellers are artificially restricting supply to raise price.
c. government is imposing a legal price that is below the equilibrium price.
d. government is imposing a legal price that is above the equilibrium price.