Supply
Supply is from the perspective of the ___________
Producer or Supplier
Demand is from the perspective of the ____________
Comsumer or buyer
If a farmer’s crops fail in Alberta (wheat, barley, oats, etc), what happens to the supply?
A. Supply increases
B. Supply stays the same
C. Supply decreases
D. Supply becomes unlimited
Answer: C. Supply decreases
What is a complement to cereal?
A. Milk
B. Bread
C. Butter
D. Juice
Answer: A. Milk
A new smartphone is released on the market, but it is priced at $1,500, which is much higher than the average consumer can afford. Many potential buyers find it too expensive and decide not to purchase it, despite the smartphone’s advanced features.
What happens if the price of a good is too high for most consumers?
A. Demand increases
B. Supply disappears
C. Consumers will buy more
D. Fewer people will buy it
Answer: D. Fewer people will buy it
What is the main goal of a supplier in economics?
A. To make customers happy
B. To provide free products
C. To maximize profit
D. To reduce demand
Answer: C. To maximize profit
What is the largest factor in determining demand?
A. Weather
B. The price of the product
C. Advertising
D. The number of stores
Answer: B. The price of the product
Explanation: Price is the biggest factor because as prices go up or down, consumers are more or less likely to buy the product — following the law of demand.
What do stores usually do when they have excess supply (a surplus)?
A. Raise the price
B. Throw the products away
C. Lower the price to encourage sales
D. Stop selling other products
Answer: C. Lower the price to encourage sales
Imagine a family that usually buys a certain brand of cereal for $3 per box. However, the price of the cereal increases to $4. The family now feels like they have less money to spend on other things, even though their actual income hasn’t changed.
When prices rise, people feel poorer. This is termed the ______________ effect.
A. Substitution
B. Income
C. Demand
D. Supply
Answer: B. "Income effect"
When prices rise, it feels like consumers have less purchasing power because they can no longer afford to buy the same amount of goods or services. Even if their income stays the same, the higher prices make them feel "poorer," affecting their purchasing decisions.
What does "equilibrium price" mean?
A. The price after a discount
B. The price set by the government
C. The price where supply equals demand
D. The lowest possible price
Answer: C. The price where supply equals demand
3. What is a substitute good?
A. A product that costs the same as another
B. A product used together with another
C. A cheaper version of the same product
D. A product used instead of another
Answer: D. A product used instead of another
The demand curve increases in quantity as price:
A. Increases
B. Decreases
C. Stays the same
D. Doubles
Answer: B. Decreases
This follows the law of demand — when prices go down, people are more willing and able to buy more of a product.
Which of the following are four main factors that can shift demand?
A. Price, temperature, location, and packaging
B. Income, population, consumer preferences, and price of related goods
C. Weather, store hours, brand name, and taxes
D. Supply, imports, exports, and interest rates
Answer: B. Income, population, consumer preferences, and price of related goods
What is the term for a table or graph that shows the relationship between the price of a product and the quantity supplied by producers?
A. Demand curve
B. Supply curve
C. Market equilibrium
D. Elasticity curve
Answer: B. Supply curve
If a store has too much of a product and no one is buying, it has a:
A. Demand problem
B. Shortage
C. Perfect market
D. Surplus
Answer: D. Surplus
As quantity of an item increases, the price also increases.
This is because producers are willing to supply more only if they can get a higher price (which helps cover higher production costs). TRUE or FALSE
TRUE
What is a complementary good?
A. A product used instead of another
B. A product that is free with another product
C. A product that must be used with another product
D. A product made by the same company
Answer: C. A product that must be used with another product
A popular new video game has just been released. The demand for the game is so high that the store runs out of stock quickly, and customers are lining up outside waiting for more copies. The store manager decides to adjust the situation.
What is the most likely action the store will take when it has excess demand (a shortage)?
A. Lower the price to encourage more customers to buy
B. Raise the price to manage the high demand and balance supply
C. Stop selling the game entirely
D. Keep the price the same and wait for new shipments
Answer: B. Raise the price to manage the high demand and balance supply
Which of the following is an example of supply and demand in real life?
A. Doing homework for school
B. Playing video games
C. Buying a concert ticket that sells out quickly
D. Visiting your friend’s house
Answer: C. Buying a concert ticket that sells out quickly
Why is the price of automobile fuel so high in Alberta, even though oil and gas are produced there?
A. High demand for oil and gas in Alberta
B. The cost of refining and transportation
C. Oil production in Alberta is very low
D. Alberta has a low supply of crude oil
Answer: B. The cost of refining and transportation is higher
A movement along the curve is referred to as _______ in _______ supplied.
Change, Quantity
Why do prices rise when there's a high demand and low supply?
A. Sellers want to give deals
B. Government sets prices
C. To make products more affordable
D. Products become more valuable
Answer: D. Products become more valuable
Last summer in Calgary, a major water main broke, causing disruptions to the city's water supply. As a result, many people rushed to buy bottled water. Stores quickly ran out of stock, and customers were unable to find any more water. The combination of the water main repair and the high demand led to a shortage in stores.
Which situation is an example of a shortage?
A. People can’t find bottled water in stores because of a water main repair and increased demand
B. A store clears out old bottled water by offering discounts
C. A grocery store has a sale on water bottles at the end of summer
D. A factory produces more bottled water to meet demand
Answer: A. People can’t find bottled water in stores because of a water main repair and increased demand
What role do consumers play in supply and demand?
A. They make the goods
B. They set all the prices
C. They create demand
D. They control the market
C. They are the ones who create the demand
_________ is the a Latin phrase economists use meaning, " all other things held constant."
Ceteris Paribus