Supply and Demand Quiz

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1. The demand and supply functions for muskrat tenderloins are given, respectively, by the equations: P = 20 - 0.02 Q and P = - 12 + 0.06 Q. The equilibrium price and quantity are given by:

(a) P = 12 and Q = 7200.
(b) P = 20 and Q = 1000.
(c) P = 400 and Q = 12.
(d) P = 12 and Q = 400.

2. If the price of tamarind falls, there will be:

(a) an increase in the demand for tamarind.
(b) an increase in the quantity demanded of tamarind.
(c) a decrease in the demand for tamarind.
(d) a shift in the demand for tamarind.

3. If really cool people are seen in public wearing henins, there will be as a result:

(a) An increase in the quantity demanded of henins but no change in the quantity supplied of henins.
(b) An increase in demand for henins but no change in the quantity supplied of henins.
(c) An increase in demand for henins and an increase in the quantity supplied of henins.
(d) An increase in both the quantity demanded of henins and the quantity supplied of henins.

4. Octavian's demand for orpharions is given by the step function in the diagram at right. Which of the following statements is a correct inference from this diagram?

(a) He would be willing to pay as much as $30 in exchange for two orpharions.
(b) His average willingness to pay for each of three orpharions is $20.
(c) His marginal or incremental willingness to pay to obtain a third orpharion is zero.
(d) His marginal or incremental willingness to pay to obtain a second orpharion is $30.

5. Your supply curve for hours to work at part-time jobs is probably upward-sloping because:

(a) Successive hours of work have increasingly high opportunity cost to you.
(b) The average opportunity cost of the hours you work increases with the number of hours you work.
(c) You can make more money at a higher wage rate.
(d) Employers are willing to pay more for workers who can work longer hours.

6. When the supply of panharmonicons increases, the change is geometrically best described as:

(a) a leftward shift of the supply curve.
(b) a rightward shift of the supply curve.
(c) an upward shift of the supply curve.
(d) a downward shift of the supply curve.

7. If the price of cheeseburgers rises, then in the market for pizza:

(a) supply increases and quantity demanded increases.
(b) demand increases and quantity supplied increases.
(c) supply decreases and quantity demanded decreases.
(d) demand decreases and quantity supplied decreases.

8. The availability of microwave ovens substantially reduces the labor required to make polenta. In the market for polenta, the invention of microwave ovens:

(a) reduces the equilibrium quantity and the equilibrium price.
(b) increases both the equilibrium quantity and the equilibrium price.
(c) reduces the equilibrium quantity and increases the equilibrium price.
(d) increases the equilibrium quantity and reduces the equilibrium price.

9. If the supply of Insufferable Windbags™ increases and, simultaneously, the demand decreases, then:

(a) the equilibrium price falls and the equilibrium quantity remains unchanged.
(b) the equilibrium price falls and the equilibrium quantity may rise, fall, or remain unchanged.
(c) the equilibrium price falls and the equilibrium quantity rises.
(d) both the equilibrium price and the equilibrium quantity fall.

10. Suppose that a vile pest (Cigarus fetida) attacks tobacco plants and reduces the supply of tobacco leaves by ten million pounds a year at every price. All else equal, the equilibrium quantity of tobacco leaves that are exchanged in the wholesale market will fall by:

(a) more than ten million pounds a year.
(b) less than ten million pounds a year.
(c) exactly ten million pounds a year.
(d) an amount that cannot be determined without further information.

11. The accompanying diagram shows the demand and supply for penthouses in Luxuryland. If rent controls are imposed that forbid price to exceed 25, then:

(a) price will fall to 25, 15 units of housing will be rented, and the market will clear.
(b) price will fall to 25, 15 units of housing will be rented, and a surplus of 20 units will arise.
(c) price will fall to 25, 15 units of housing will be rented, and a shortage of 20 units will arise.
(d) neither price nor quantity will be affected by the rent control regulation.

12. The demand for gondoliers is given by the equation P = 80 - 3 Q and the supply is given by P = 30 + 2 Q. After a lengthy strike, the City Council accedes to the gondoliers' demands and enacts a minimum wage of 62 florins per fortnight. As a result,

(a) the wage rate rises by 12, the number of gondoliers employed falls by 4, and a shortage of 10 gondoliers arises.
(b) the wage rate rises by 12, the number of gondoliers employed falls by 4, and a surplus of 10 gondoliers arises.
(c) the wage rate rises by 12, the number of gondoliers employed increases by 6, and a surplus of 10 gondoliers arises.
(d) neither price nor quantity changes, and the market continues to clear.

13. The demand and supply for ophicleides are illustrated in the accompanying diagram. If a price ceiling at $7 per unit is imposed, then:

(a) a shortage will arise.
(b) a surplus will arise.
(c) price will fall.
(d) nothing will change.

14. In the very short run, the imposition of rent controls:

(a) has no effect on the housing market because it takes time for landlords to adjust quantity.
(b) causes a surplus of housing.
(c) has no effect on the price of housing.
(d) creates a shortage as buyers increase quantity demanded.

15. Suppose that a price ceiling of $3 per carton is imposed on the market for shoelace ferrules, whose demand and supply curves are illustrated at right. Suppose further that a black market arises for ferrules. (You can assume that ferrule manufacturers are unable to sell on the black market.) The black market price is:

(a) 3
(b) 5
(c) 7
(d) 10