70 section 2 Supply and Demand
Tackle the Test: Multiple-Choice Questions
- Which of the following will decrease the supply of good “X”?
a. There is a technological advance that affects the production
ofallgoods.
b. The price of good “X” falls.
c. The price of good “Y” (which consumers regard as a
substitute for good “X”) decreases.
d. The wages of workers producing good “X” increase.
e. The demand for good “X” decreases. - An increase in the demand for steak will lead to an increase in
which of the following?
a. the supply of steak
b. the supply of hamburger (a substitute in production)
c. the supply of chicken (a substitute in consumption)
d. the supply of leather (a complement in production)
e. the demand for leather - A technological advance in textbook production will lead to
which of the following?
a. a decrease in textbook supply
b. an increase in textbook demand
c. an increase in textbook supply
d. a movement along the supply curve for textbooks
e. an increase in textbook prices- Which of the following is true at equilibrium?
a. The supply schedule is identical to the demand schedule at
every price.
b. The quantity demanded is the same as the quantity
supplied.
c. The quantity is zero.
d. Every consumer who enjoys the good can consume it.
e. Producers could not make any more of the product
regardless of the price. - The market price of a good will tend to rise if
a. demand decreases.
b. supply increases.
c. it is above the equilibrium price.
d. it is below the equilibrium price.
e. demand shifts to the left.
Tackle the Test: Free-Response Questions
- Draw a correctly labeled graph showing the market for tomatoes
in equilibrium. Label the equilibrium price “PE” and the
equilibrium quantity “QE.” On your graph, draw a horizontal line
indicating a price, labeled “PC”, that would lead to a shortage of
tomatoes. Label the size of the shortage on your graph.
Answer (6 points)
1 point:Graph with the vertical axis labeled “Price” or “P” and the horizontal
axis labeled “Quantity” or “Q”
1 point:Downward sloping demand curve labeled “Demand” or “D”
1 point:Upward sloping supply curve labeled “Supply” or “S”
1 point:Equilibrium price “PE” labeled on the vertical axis and quantity “QE”
labeled on the horizontal axis at the intersection of the supply and demand curves
1 point:Price line at a price “PC” below the equilibrium price
1 point:Correct indication of the shortage, which is the horizontal distance
between the quantity demanded and the quantity supplied at the height of PC
Price
QuantityDSPE EPCQEShortage- Draw a correctly labeled graph showing the market for oranges
in equilibrium. Show on your graph how a hurricane that
destroys large numbers of orange groves in Florida will affect
supply and demand, if at all.