Name: Class: Date:

Supply and Demand Review

Indicate the answer choice that best completes the statement or answers the question.
1. The demand for a good or service is determined by
a. those who buy the good or service.
b. the government.
c. those who sell the good or service.
d. both those who buy and those who sell the good or service.

2. A market includes
a. buyers only.
b. sellers only.
c. both buyers and sellers.
d. the place where transactions occur but not the people involved.

3. For a competitive market,

a. a seller can always increase her profit by raising the price of her product.
b. if a seller charges more than the going price, buyers will go elsewhere to make their purchases.
c. a seller often charges less than the going price to increase sales and profit.
d. a single buyer can influence the price of the product but only when purchasing from several sellers in a short
period of time.

4. Which of the following is the least likely to be a competitive market?

a. ice cream
b. soybeans
c. cable television
d. new houses
Name: Class: Date:

Supply and Demand Review

Figure 4-1

5. Refer to Figure 4-1. The movement from point A to point B on the graph is caused by a(n)
a. increase in price.
b. decrease in price.
c. decrease in the price of a substitute good.
d. increase in income.

6. The following table contains a demand schedule for a good.

Price Quantity Demanded
$30 A
$50 300
If the law of demand applies to this good, then A could be
a. 0.
b. 100.
c. 200.
d. 400.

7. The line that relates the price of a good and the quantity demanded of that good is called the demand
a. schedule, and it usually slopes upward.
b. schedule, and it usually slopes downward.
c. curve, and it usually slopes upward.
d. curve, and it usually slopes downward.
Name: Class: Date:

Supply and Demand Review

Table 4-2
Abby’s Brandi’s Carrie’s DeeDee’s
Quantity Quantity Quantity Quantity
Price Demanded Demanded Demanded Demanded
$12 2 1 3 4
$10 4 4 4 5
$8 6 7 5 6
$6 8 8 4 7
$4 10 9 3 8
$2 12 10 2 9
8. Refer to Table 4-2. Suppose Abby, Brandi, Carrie, and DeeDee are the only four buyers in the market. If the price
is $8, then the market quantity demanded is
a. 4 units.
b. 6 units.
c. 24 units.
d. 32 units.

9. A decrease in quantity supplied

a. results in a movement downward and to the left along a fixed supply curve.
b. results in a movement upward and to the right along a fixed supply curve.
c. shifts the supply curve to the left.
d. shifts the supply curve to the right.

10. If something happens to alter the quantity supplied at any given price, then
a. we move along the supply curve.
b. the supply curve shifts.
c. the supply curve becomes steeper.
d. the supply curve becomes flatter.

11. A leftward shift of a supply curve is called a(n)

a. increase in supply.
b. decrease in supply.
c. decrease in quantity supplied.
d. increase in quantity supplied.

12. At the equilibrium price, the quantity of the good that buyers are willing and able to buy
a. is greater than the quantity that sellers are willing and able to sell.
b. exactly equals the quantity that sellers are willing and able to sell.
c. is less than the quantity that sellers are willing and able to sell.
d. Either a) or c) could be correct.
Name: Class: Date:

Supply and Demand Review

Table 4-9
An Increase in Supply A Decrease in Supply
An Increase in Demand A B
A Decrease in Demand C D
13. Refer to Table 4-9. Which combination would produce a decrease in equilibrium price and an indeterminate change
in equilibrium quantity?
a. A
b. B
c. C
d. D

14. A university's football stadium is always sold out, and students who wait in line for hours may be turned away. This
indicates
a. the ticket price is above the equilibrium price.
b. the ticket price is below the equilibrium price.
c. the ticket price is at the equilibrium price.
d. nothing about the equilibrium price.

Table 4-12
A country club usually only allows members to purchase tickets for its celebrity golf tournament, but the club is
considering allowing non-members to purchase tickets this year. The demand and supply schedules are as follows:
Quantity Demanded Quantity Demanded
Price Quantity Supplied
by Members by Non-members
$10 1000 500 600
$15 800 400 600
$20 600 300 600
$25 400 200 600
$30 200 100 600
15. Refer to Table 4-12. If both members and non-members are allowed to purchase tickets to this year's celebrity golf
tournament and the country club sets the ticket price at $30, then there will be
a. a shortage of 300 tickets.
b. a surplus of 300 tickets.
c. 600 tickets sold.
d. 600 tickets unsold.

16. In any economic system, scarce resources have to be allocated among competing uses. Market economies harness
the forces of
a. government to allocate scarce resources.
b. supply and demand to allocate scarce resources.
c. credit cards to allocate scarce resources.
d. nature to allocate scarce resources.
Name: Class: Date:

Supply and Demand Review

17. Which of these statements does not apply to market economies?

a. Prices prevent decentralized decision making from degenerating into chaos.
b. Prices coordinate the actions of millions of people with varying abilities and desires.
c. Prices ensure that anyone who wants a product can get it.
d. Prices ensure that what needs to get done does in fact get done.

18. Suppose the United States had a short-term shortage of farmers. Which mechanisms would adjust to remove the
shortage?
a. The government would provide tax incentives to encourage people to become farmers.
b. The government would subsidize the production of food.
c. The prices of food and the wages of farmers would adjust.
d. There are no mechanisms to remove the shortage.

19. Adam Smith suggested that an invisible had guides market economies. In this analogy, what is the baton that the
invisible hand uses to conduct the economic orchestra?
a. the government
b. prices
c. subsidies
d. the Federal Reserve

Table 4-14
The table below shows the quantities demanded of milk per month by four families at various prices.
Price of Gallon of The Berman The Johnson The Harris
The Patel Family
Milk Family Family Family
$3.00 9 15 12 14
$4.00 8 12 10 10
$5.00 7 9 8 6
$6.00 6 6 6 2
20. Refer to Table 4-14. If the four families listed are the only demanders in this market and the price of a gallon of milk
is $4.00, what is the market quantity demanded?
Name: Class: Date:

Supply and Demand Review

Answer Key

1. a

2. c

3. b

4. c

5. b

6. d

7. d

8. c

9. a

10. b

11. b

12. b

13. c

14. b

15. b

16. b

17. c

18. c

19. b
20. 40 gallons