Supply and Demand Test

Supply and Demand Test

regulationsincome effectdiminishing marginal utility (DMU)

equilibrium pricecomplementincome effectsubsidies

taxprice floorprice ceilingshortage

surplusmovement shiftdemand

1.when the price is higher than the market price

2.gov't rules about how companies conduct business

3.required payment of money to the gov't to help fund gov't services

4.when you have a price floor, this usually results

5.when something other than price affects quantity supplied or demanded

6.when supply and demand meet

7.when one buys this product, one also tends to buy this as well

8.the effect that increasing or decreasing prices has on the buying power of income

9.when you have a price ceiling, this usually results

10.the effect that increasing or decreasing prices has on one’s buying power

11.payments to private businesses by the gov't

12.the usefulness or value of a product decreases with each additional purchase of it

13.when people are willing to pay for a good or service

14.when price is the only factor that affects quantity demanded or supplied

15.when the price is lower than the market price

16. List three pairs of complementary goods.

17. Write the law of demand and the law of supply. Label.

18. For each of the following scenarios, state whether supply or demand would change, the direction the curve would shift, and the reason for the shift.

a. Market: candy. News event: Because of a federal sugar policy designed to protect U.S.

sugar producers, the price of sugar increases.

1. Market: cars. News event: Congress approves across-the-board tax cuts.

1. Market: gas. News event: Hurricane Katrina wipes out 60% of offshore refineries.

19. What language do consumers and producers use to communicate?

A. FrenchC. money

B. graphsD. price

20. The amount of a good or service that a consumer is willing and able to buy at various possible

prices during a given time period is

A. supply.C. income effect.

B. demand.D. purchasing power.

21. ______describes the usefulness of a product or the amount of satisfaction that an

individual receives from consuming a product.

A. UtilityC. Substitution effect

B. DeterminantD. Market size

22. Determinants of Demand

A. consumer tastes and preferencesC. market size

B. incomeD. prices of related goods

E. consumer expectationsF. all of the above

23. Price causes changes in demand _____ the curve. Other factors in the change in demand cause

a _____ of the curve to the left or the right.

A. beyond, blendingC. along, shift

B. beside, angleD. through, bending

24. When looking at a demand curve, a shift to the left means a(n) ______in demand. While a

shift to the right means a(n) ______in demand.

A. increase, decrease

B. decrease, increase

25. Demand: When a the product is not a necessity, there are readily available substitutes, and the

product’s cost represents a large portion of consumers’ income—that product is considered

A. inelastic

B. elastic

26. Demand: When a product is the product is a necessity, there are no or few readily available

substitutes, and the product’s cost represents a small portion of the consumers’ income—that

product is considered

A. inelastic

B. elastic

27. The way a business measures the elasticity of its product is to calculate its

A. purchasing power.C. total revenue.

B. worthiness.D. weight.

28. Supply: When a product can be made quickly, inexpensively, and using a few readily available

resources, it is considered

A. inelastic

B. elastic

29. Supply: When a product takes more time, money, and resources that are not readily available,

it is considered

A. inelastic

B. elastic

30. State whether the demand for each is elastic or inelastic and provide a reason.

31. Demand Schedule – Plot the information on the available graph. Label the demand curve D1.

If the price of a movie ticket wasPeople would buy

$1.00600

$2.00500

$5.00400

$7.00300

$9.00200

$11.00100

32. Supply Schedule – Plot the information on the available graph. Label the supply curve S1.

If the price of a movie ticket wasSeller would provide

$1.000

$2.00100

$5.00250

$7.00300

$9.00500

$11.00700

33. What is the equilibrium price? ______How many tickets would the seller provide at the

equilibrium price? ______

34. DVD prices plummet. Figure out if this affects demand or supply and draw a new curve that

reflects the impact. Label it either D2 or S2.

35. The local multiplex theatre is running a special on popcorn and soda. Regularly priced snacks

would cost $10.00, but the sale price is $5.00 with free refills. Figure out if this affects

demand or supply and draw a new curve that reflects the impact. Label it either D3 or S3.