Q uigk quiz

1. Demand curve D is downsloping because:

a. producers offer less product for sale as the price of the product falls.

b. lower prices of a product create income and substitution effects, which lead consumers to purchase more of it.

c. the larger the number of buyers in a market, the lower the product price.

d. price and quantity demanded are directly (positively) related.

2. Supply curve S:

a. reflects an inverse (negative) relationship between price and quantity supplied.

b. reflects a direct (positive) relationship between price and quantity supplied.

c. depicts the collective behaviour of buyers in this market.

d. shows that producers will offer more of a product for sale at a low product price than at a high product price.

3. At the $3 price a. quantity supplied exceeds quantity demanded.

b. quantity demanded exceeds quantity supplied.

c. the product is abundant and a surplus exists.

d. there is no pressure on price to rise or fall.

4. At price $5 in this market:

a. there will be a shortage of 10,000 units b. there will be a surplus of 10,000 units.

c. quantity demanded will be 12,000 units d. quantity demanded will equal quantity supplied.

Answers:

q :p ■£ :q -z :q "l chapter three • individual markets: demand and supply pay $ will go without corn. Similarly, all producers who are willing and able to offer corn for sale at $ a bushel will sell it; all producers who can not or will not sell for $ per bushel will not sell their product. (Key Question 7)

Changes in Supply, Demand, and Equilibrium

We know that demand might change because of fluctuations in consumer tastes or incomes, changes in consumer expectations, or variations in the prices of related goods. Supply might change in response to changes in resource prices, technology, or taxes. What effects will such changes in supply and demand have on equilibrium price and quantity?

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