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Exam 4: The Market Forces of Supply and Demand

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Question 131

Multiple Choice

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You lose your job and, as a result, you buy fewer iTunes music downloads. This shows that you consider iTunes music downloads to be

A) a substitute good.
B) an inferior good.
C) a normal good.
D) a complementary good.

E) A) and B)
F) None of the above

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Question 132

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The law of demand states that, other things equal, when the price of a good

A) falls, the demand for the good rises.
B) rises, the quantity demanded of the good rises.
C) rises, the demand for the good falls.
D) falls, the quantity demanded of the good rises.

E) A) and B)
F) B) and D)

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Question 133

Multiple Choice

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A supply schedule is a table that shows the relationship between

Most studies have found that tobacco and marijuana are substitutes rather than complements.

Figure 4-10 -Refer to Figure 4-10. Which of the following movements would illustrate the effect of an increase in the price of microprocessors, a material used to make laptops, on the market for laptops?

Most markets in the economy are highly competitive.

A group of buyers and sellers of a particular good or service is called

If a company making frozen orange juice expects the price of its product to be higher next month, it will supply more to the market this month.

If the demand for a good falls when income falls, then the good is called

At the equilibrium price, buyers have bought all they want to buy, but sellers have not sold all they want to sell.

The equilibrium price is the same as the market-clearing price.

Scenario 4-1 Suppose the demand schedule in a market can be represented by the equation Q^D = 500 - 10P, where Q^D is the quantity demanded and P is the price. Also, suppose the supply schedule can be represented by the equation Q^S = 200 + 10P, where Q^S is the quantity supplied. -Refer to Scenario 4-1. Suppose the price is currently equal to 10 in this market. Is there a shortage or surplus in this market, and how large is the shortage/surplus?

If a higher price means a greater quantity supplied, then the supply curve slopes upward.

Price will rise to eliminate a surplus.

Scenario 4-1 Suppose the demand schedule in a market can be represented by the equation Q^D = 500 - 10P, where Q^D is the quantity demanded and P is the price. Also, suppose the supply schedule can be represented by the equation Q^S = 200 + 10P, where Q^S is the quantity supplied. -Refer to Scenario 4-1. What is the equilibrium price in this market?

At the equilibrium price, the quantity of the good that buyers are willing and able to buy

Figure 4-7 ​ -Refer to Figure 4-7. At a price of $15, there would be a

What will happen to the equilibrium price and quantity of new cars if the price of gasoline rises, the price of steel rises, public transportation becomes cheaper and more comfortable, and auto-workers negotiate higher wages?

If income rises in the market for a normal good, will the demand curve for the normal good shift to the right or to the left?

Assume Kalene buys notebooks in a competitive market. It follows that