SUPPLY
Which of the following events will cause a movement along the supply curve for coffee, rather than a shift of the curve?
A. A change in the market price of coffee.
B. A change in the wages paid to coffee bean pickers.
C. A frost that destroys a large portion of the coffee crop.
D. An increase in the number of coffee shops operating in town.
A. A change in the market price of coffee.
Explanation: In economics, a change in the price of the good itself (coffee) is the only factor that alters the quantity supplied.
A study is published showing that eating dark chocolate daily significantly improves heart health. What immediate effect does this have on the market for dark chocolate?
A. The demand curve shifts to the left
B. The demand curve shifts to the right
C. There is a downward movement along the demand curve
D. The supply curve shifts to the left
B. The demand curve shifts to the right
Explanation: Change in Tastes and Preferences: Positive health news increases consumer preference for dark chocolate.
At the market equilibrium price, which of the following statements is true?
A. The total amount of goods produced equals the total amount consumers wish they could buy in an ideal world.
B. The quantity demanded by consumers equals the quantity supplied by producers.
C. Supply is equal to demand across all possible prices.
D. The market experiences either a temporary surplus or a temporary shortage.
B. The quantity demanded by consumers equals the quantity supplied by producers.
Explanation: market equilibrium occurs at the specific price point where the intentions of buyers and sellers align perfectly. At this price, the exact amount of a good or service that consumers are willing and able to buy (quantity demanded) is identical to the exact amount that producers are willing and able to sell (quantity supplied)
A group of people buying and selling goods and services. This is the definition for:
a. demand
b. equilibrium
c. market
d. supply
c. market
Explanation:
A market is an arrangement, institution, or group of buyers and sellers coming together to trade or exchange goods and services.
According to the law of supply, what is the relationship between the price of a good and the quantity supplied?
A. Inverse relationship — as price rises, quantity supplied falls.
B. Direct relationship — as price rises, quantity supplied rises.
C. No relationship — quantity supplied remains constant regardless of price.
D. Direct relationship — as price falls, quantity supplied rises.
B. Direct relationship — as price rises, quantity supplied rises.
Explanation: There is a direct (or positive) relationship between the price of a good and its quantity supplied
If the price of peanut butter increases and, as a result, the demand for jelly increases, how are peanut butter and jelly related?
A. They are substitute goods
B. They are complementary goods
C. They are inferior goods
D. They are unrelated or independent goods
A. They are substitute goods
Explanation: Substitute goods share a positive relationship between the price of one item and the demand for the other. When the price of Item A goes up, consumers look for alternative options, causing the demand for Item B to increase
If a market price is currently set below the equilibrium price, what will be the result in the market?
A. A surplus, because producers want to sell more than consumers are willing to buy.
B. Equilibrium, because lower prices naturally balance the market out immediately.
C. A shortage, because the quantity demanded exceeds the quantity supplied.
D. A shortage, because the quantity supplied exceeds the quantity demanded.
C. A shortage, because the quantity demanded exceeds the quantity supplied.
Explanation: When the market price is lower than the equilibrium price, consumers want to buy more of the good at that low price (higher quantity demanded), while producers are less willing or able to make as much of it (lower quantity supplied). This mismatch creates a shortage.
The desire to own a product and the ability/ willingness to pay for it is known as:
a. supply
b. elasticity
c. demand
d. market
c. demand
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.
D.beyond some point the production costs of additional units of output will rise.
D.beyond some point the production costs of additional units of output will rise.
Explanation: In microeconomics, a individual firm's short-run supply curve is derived from its marginal cost curve
According to the Law of Demand, what happens to the quantity demanded of a good when its price increases, assuming all other factors remain constant?
.According to the Law of Demand, what happens to the quantity demanded of a good when its price increases, assuming all other factors remain constant (ceteris paribus)?
A. Quantity demanded increases
B. Quantity demanded decreases
C. Quantity demanded stays the same
D. Supply increases
B. Quantity demanded decreases
Explanation: When its price increases, assuming all other factors remain constant (ceteris paribus).
Suppose the market price for a pair of designer sneakers is set above the equilibrium price. What happens in this market?
A. A shortage occurs as eager buyers scramble for limited sneakers.
B. Demand shifts to the right to meet the higher price.
C. The market automatically reaches a new equilibrium without any price adjustment.
D. A surplus occurs, leading sellers to lower prices to clear out excess inventory.
D. A surplus occurs, leading sellers to lower prices to clear out excess inventory.
Explanation: When the market price is set higher than the equilibrium price, suppliers are eager to sell more at that high price (higher quantity supplied). However, consumers are less willing to buy at that expensive rate (lower quantity demanded). This mismatch creates a surplus (excess supply)
With regard to demand, a change in price of a productive/service results in movement along the curve.
True or False
True
Explanation: Movement along the curve: A change in the price of a good or service causes a change in the quantity demanded, which is shown by sliding from one point to another on the same demand curve
(B) Firm X, because it has access to readily available substitute inputs and flexible manufacturing
Explanation: Price Elasticity of Supply measures how responsive quantity supplied is to a change in price. Flexibility of inputs, excess capacity, and shorter production timelines make supply more elastic.
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
C.an effective advertising campaign by pork producers
D.a change in the incomes of beef consumers
B.a reduction in the price of cattle feed
Explanation: It affects supply, not demand: Cattle feed is an input cost used to produce beef. A reduction in the price of an input makes production cheaper, which shifts the supply curve to the right.
Suppose scientists discover that drinking green tea daily boosts metabolism significantly. What is the effect on the equilibrium price and quantity of green tea?
A. Equilibrium price increases and equilibrium quantity increases.
B. Equilibrium price decreases and equilibrium quantity decreases.
C. Equilibrium price increases and equilibrium quantity decreases.
D. Equilibrium price decreases and equilibrium quantity increases.
A. Equilibrium price increases and equilibrium quantity increases.
Explanation: Higher consumer demand creates a shortage at the old price, driving the equilibrium price up.
In the Law of Supply, an increase in price results in:
a. decrease of quantity supplied
b. increase of quantity supplied
b. increase of quantity supplied
Explanation: According to the Law of Supply, there is a direct (positive) relationship between the price of a good or service and the amount that producers are willing to provide
What are the determinants of Supply?
Consumer Income
Price of Related Goods
Taste & Preferences
Consumer Expectations
# of Buyers
Special Circumstances
Technology
What are the determinants of Demand?
Input/Resource Prices
Production Technology
# of Sellers
Prices of Other Goods
Producer's Expectations
Taxes, Subsidies, & Regulations
Natural Disasters
A sudden drought ruins a large portion of the coffee bean harvest. How will this event impact the equilibrium price and quantity of coffee in the market?
A. Equilibrium price decreases and equilibrium quantity increases.
B. Equilibrium price increases and equilibrium quantity increases.
C. Equilibrium price increases and equilibrium quantity decreases.
D. Equilibrium price decreases and equilibrium quantity decreases.
C. Equilibrium price increases and equilibrium quantity decreases.
Explanation: A sudden drought acts as a negative supply shock. Because a large portion of the crop is ruined, producers cannot bring as much coffee to the market at any given price. This shifts the market supply curve to the left
The supply curve shows the relationship of quantity and price demanded.
True or False
False
Explanation: The Supply Curve: It shows the direct (positive) relationship between the price of a good and the quantity supplied by producers. As the price goes up, producers generally supply more