Question

26. What happens in the market for tortilla chips if the price of salsa, a complement, decreases?

Multiple Choice

1. The demand for tortilla chips decreases.
2. The supply of tortilla chips increases.
3. The demand for tortilla chips increases.
4. The supply of tortilla chips decreases.

28. The amount of a good or a service that a consumer buys at a specific price is called:

Multiple Choice

1. demand.
2. law of demand.
3. quantity demanded.
4. quantity supplied.

29. "When the price of soda increases, we tend to buy less soda. When the price of soda decreases, we tend to buy more soda." This relationship between price and quantity is defined as:

Multiple Choice

1. the law of demand.
2. the law of supply.
3. demand.
4. quantity demanded.

30. The inverse relationship between the price of a good or service and the quantity demanded for that good is shown in a graph:

Multiple Choice

1. as an upward-sloping curve.
2. as an upward-sloping, straight line.
3. as a production possibilities frontier.
4. as a downward-sloping curve.

31. An upward-sloping curve (or line) on a graph with price on the y-axis and quantity on the x-axis is called:

Multiple Choice

A. the supply curve.

B. the demand curve.

C. the supply schedule.

D. the demand schedule.

32. In economics, the supply of a good or service refers to:

Multiple Choice

1. the amount of a good or service that consumers are willing and able to buy.
2. the amount of a good or service that producers are willing to supply at each price.
3. the quantity that producers supply at a specific price.
4. the quantity that consumers buy at each price.

33. The amount of a good or a service that a producer supplies at a specific price is called:

Multiple Choice

1. supply.
2. demand.
3. quantity supplied.
4. quantity demanded.

34. Market equilibrium occurs where:

Multiple Choice

1. the supply curve and the demand curve intersect the y-axis.
2. the supply curve and the demand curve intersect the x-axis.
3. the price equals demand.
4. the supply curve and the demand curve intersect.

35. When a price is above equilibrium price, there is:

Multiple Choice

1. excess demand.
2. a shortage.
3. scarcity.
4. a surplus.

36. When a price is below equilibrium price, there is:

Multiple Choice

1. excess demand.
2. a surplus.
3. scarcity.
4. excess supply.

37. Which of the following will not shift the demand curve for beef?

Multiple Choice

Consumer incomes change.

Consumers begin to prefer chicken over beef.

The price of pork, a substitute, changes greatly.

The price of beef changes.

Answer 1

26. C. The demand for tortilla chips increases

Complementary goods are demanded jointly. If price of good rises, demand for related good will fall; price of good falls, demand for related good rises.

28. C. Quantity demanded

Quantity demanded is the amount of a good or service that a consumer is willing and able to purchase at a specific price

29. A. The law of demand

The law of demand states that, other things remaining constant, quantity demanded increases with the fall in price and quantity demanded decreases with the rise in price.

30. D. as a downward-sloping curve

According to the law of demand, quantity demanded varies negatively, or inversely, with the price. Demand curve has a negative gradient which makes it a downward sloping curve.

31. A. the supply curve

Generally, upward sloping line shows a positive relationship between two variables. The supply curve generally slopes upward because the higher a price for a good, higher the supply. As the producer can make high profit.

32. B. the amount of a good or service that producers are willing to supply at each price.

Supply is a wider concept - the amount of product or services that producers are willing to sell.

33. C. quantity supplied

Quantity supplied is narrow concept - The amount offered for sale per period at a particular price.

34. D. the supply curve and the demand curve intersect

Market equilibrium is a situation where demand is equal to supply. So at market equilibrium demand curve intersects supply curve.

35. D. a surplus

If the market price is above the equilibrium price, quantity supplied is greater than quantity demanded, creating a surplus.

36. C. Scarcity

If the market price is below the equilibrium price, quantity supplied is less than quantity demanded, creating a shortage (scarcity)

37. The price of beef changes

Shift in demand curve is caused by determinants of demand and movement along the demand curve is caused by the price of the commodity. Changes in the price of beef causes movement along the demand curve.