INSTRUCTIONS: Select the BEST answer for each question by marking the circle next to your selection, then click on the [Grade the Test] button at the bottom.
1.
| An increase in the price of a product will reduce the amount of it purchased because:
A.
| supply curves are upsloping.
|
B.
| the higher price means that real incomes have risen.
|
C.
| consumers will substitute other products for the one whose price has risen.
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D.
| consumers substitute relatively high-priced for relatively low-priced products.
|
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2.
| Which of the following will not cause the demand for product K to change?
A.
| a change in the price of close-substitute product J
|
B.
| an increase in consumer incomes
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C.
| a change in the price of K
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D.
| a change in consumer tastes
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3.
| Which of the following would not shift the demand curve for beef?
A.
| a widely publicized study which indicates beef increases one's cholesterol
|
B.
| a reduction in the price of cattle feed
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C.
| an effective advertising campaign by pork producers
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D.
| a change in the incomes of beef consumers
|
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4.
| If the price of K declines, the demand curve for the complementary product J will:
|
5.
| A firm's supply curve is upsloping because:
A.
| the expansion of production necessitates the use of qualitatively inferior inputs.
|
B.
| mass production economies are associated with larger levels of output.
|
C.
| consumers envision a positive relationship between price and quality.
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D.
| beyond some point the production costs of additional units of output will rise.
|
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6.
|
Refer to the above diagram. The equilibrium price and quantity in this market will be:
|
7.
|
Refer to the above diagram. A price of $20 in this market will result in:
B.
| a shortage of 50 units.
|
C.
| a surplus of 50 units.
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D.
| a surplus of 100 units.
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E.
| a shortage of 100 units.
|
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8.
|
Which of the above diagrams illustrate(s) the effect of a decrease in incomes upon the market for secondhand clothing?
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9.
|
Which of the above diagrams illustrate(s) the effect of a governmental subsidy on the market for AIDS research?
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10.
| An effective ceiling price will:
A.
| induce new firms to enter the industry.
|
B.
| result in a product surplus.
|
C.
| result in a product shortage.
|
|
This is the end of the test. When you have completed all the questions and reviewed your answers, press the button below to grade the test.
What best describes the relationship between price and quantity supplied?
The law of supply is the microeconomic law that states that, all other factors being equal, as the price of a good or service increases, the quantity of goods or services that suppliers offer will increase, and vice versa.
What is the relationship between price of a product and the quantity supplied?
The law of supply states that there is a direct relationship between price and quantity supplied. In other words, when the price increases the quantity supplied also increases. This is represented by an upward sloping line from left to right.
Which statement best describes the relationship of price and quantity supplied based on the law of supply?
The Law of Supply
The higher the price, the higher the quantity supplied. Lower prices mean reduced supply, all else held equal. Higher prices give suppliers an incentive to supply more of the product or commodity, assuming their costs aren't increasing as much.
What is the relation relationship between supply and price?
It's a fundamental economic principle that when supply exceeds demand for a good or service, prices fall. When demand exceeds supply, prices tend to rise. There is an inverse relationship between the supply and prices of goods and services when demand is unchanged.