Question 1

According to the law of supply, what happens to the quantity supplied of energy bars if the price increases from $$1.00 to 2.00 $$per bar, holding all else constant?

Accepted Answer

The quantity supplied increases.

Question 2

Refer to the table: At a price of $1.50 per bar, the quantity demanded and supplied are both 10 million bars per week. What does this indicate about the market for energy bars at this price?

Accepted Answer

The market is in equilibrium.

Question 3

Suppose the price of energy bars is set at $2.50 per bar. According to the table and graph, what will occur in the market?

Accepted Answer

There will be a surplus of 10 million bars per week.

Question 4

If the demand curve for energy bars shifts rightward, as shown in the graph, what is the most likely cause?

Accepted Answer

An increase in population.

Question 5

Given the supply and demand curves for energy bars, what is the equilibrium price and quantity?

Accepted Answer

$1.50 per bar and 10 million bars per week.

Question 6

If the price of a substitute for energy bars increases, what will happen to the demand for energy bars?

Accepted Answer

The demand for energy bars will increase.

Question 7

Suppose the cost of machinery used to produce energy bars increases. What will happen to the supply curve?

Accepted Answer

The supply curve will shift leftward.

Question 8

If the market price is set below the equilibrium price, what will occur in the market?

Accepted Answer

A shortage will develop.

Question 9

Which of the following best describes the law of demand?

Accepted Answer

As the price of a good increases, the quantity demanded decreases.

Question 10

If the demand curve for pizza shifts from D2 to D1 as shown in the graph, which of the following could explain this shift?

Accepted Answer

A decrease in consumer income, assuming pizza is a normal good.

Question 11

Suppose the demand curve for a good is $$Q_d = 700 - 20P$$ and the supply curve is $$Q_s = 300 + 20P. $$What is the equilibrium price?

Accepted Answer

$$P = 5$$

Question 12

If the price of energy bars is $$1.00$$ per bar, and the quantity demanded is $$16$$ million bars per week while the quantity supplied is $$6$$ million bars per week, what will happen in the market?

Accepted Answer

There will be a shortage of $$10$$ million bars per week.

Question 13

Which of the following is NOT a factor that shifts the supply curve?

Accepted Answer

The price of the good itself.

Question 14

If both demand and supply increase simultaneously, what can we predict about the equilibrium quantity?

Accepted Answer

It will definitely increase.

Question 15

If the price of a complement good decreases, what happens to the demand for the original good?

Accepted Answer

The demand for the original good increases.

Question 16

Which of the following best describes a normal good?

Accepted Answer

A good for which demand increases as income increases.

Question 17

Suppose the equilibrium price of a good is $$2.00$$ and the equilibrium quantity is $$13$$ units. If the market price rises to $$2.50$$, what will happen?

Accepted Answer

A surplus will develop.

Question 18

If the price of energy bars falls from $$1.50 to$$ $$1.00$$ per bar, what happens to the quantity supplied, according to the law of supply?

Accepted Answer

The quantity supplied decreases.

Question 19

Which of the following scenarios would cause a movement along the demand curve for energy bars, rather than a shift of the curve?

Accepted Answer

A change in the price of energy bars.

Chapter 3 Demand and Supply: Foundations of Market Equilibrium

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