Practice Quiz: Supply and Demand (Chapter 3)

Level: Intro Microeconomics, community college, as you specified. Because your midterm is mostly multiple choice, this quiz has 12 multiple-choice questions, 3 true/false, 3 short answer, and 2 scenario questions. Six questions target shifts vs. movements along the curve. Your chapter has no formulas or worked examples, so there are no calculation questions. The pasted text was clean, and I found no errors or contradictions in it.

Note: Your passage is about 450 words. For a deeper quiz next time, paste a longer passage, such as the full chapter with its examples.

How to use this

• Take the whole quiz without looking at the answer key. Write your answers down.
• Check your work against the key. Read the explanation for every question, including the ones you got right.
• Use the Coverage map to find the sections behind your misses, then reread those sections and retry those questions.

Quiz

1. [Recall] According to the chapter, the law of demand states that, all else equal:

A. As the price of a good rises, the quantity demanded rises. B. As the price of a good rises, the quantity demanded falls. C. As consumer income rises, demand always rises. D. As the price of a good rises, the quantity supplied rises.

2. [Recall] A price ceiling is:

A. A legal maximum price. B. A legal minimum price. C. The price where the supply and demand curves intersect. D. A tax placed on sellers.

3. [Recall] At the equilibrium price:

A. There is a surplus. B. Quantity demanded is greater than quantity supplied. C. Sellers tend to lower their prices. D. Quantity supplied equals quantity demanded.

4. [Recall] True or False: According to the law of supply, all else equal, as price rises, quantity supplied rises, so the supply curve slopes upward.

5. [Recall] In the chapter, complements are defined as:

A. Goods used in place of each other. B. Goods whose demand falls when income rises. C. Goods used together. D. Goods whose demand increases when income rises.

6. [Recall] True or False: A price floor is a legal maximum price.

7. [Understand] A change in a good's own price causes:

A. A movement along the demand curve, called a change in quantity demanded. B. A shift of the entire demand curve. C. A shift of the supply curve. D. A change in the slope of the demand curve.

8. [Understand] Which of the following would shift the demand curve for sneakers?

A. The price of sneakers falls by $10. B. The price of sneakers rises by $10. C. A new technology lowers the cost of making sneakers. D. Consumer income rises.

9. [Understand] True or False: If the price of concert tickets falls and fans buy more tickets, the demand curve for concert tickets has shifted to the right.

10. [Understand] If the market price is above the equilibrium price, the chapter says there will be:

A. A shortage, and prices tend to rise. B. A surplus, and sellers tend to lower prices. C. A surplus, and prices tend to rise. D. A shortage, and sellers tend to lower prices.

11. [Understand] For an inferior good, what happens when consumer income rises?

A. Demand increases. B. Quantity demanded rises along the demand curve. C. Demand falls. D. Supply falls.

12. [Understand] A new technology lowers the cost of producing a good. According to the chapter, this:

A. Shifts the supply curve to the right. B. Shifts the supply curve to the left. C. Shifts the demand curve to the right. D. Causes a movement along the supply curve only.

13. [Understand] Short answer: Explain the difference between a "change in quantity demanded" and a shift in the demand curve. Name what causes each one.

14. [Understand] Short answer: Using ideas from both Section 3.4 and Section 3.5, explain why a price ceiling set below equilibrium creates a persistent shortage rather than a temporary one.

15. [Apply/Analyze] The price of coffee rises, and the supply of tea is unchanged. Based on the chapter, what happens in the market for tea?

A. The supply of tea increases, so the equilibrium price of tea falls. B. The demand for tea decreases, so the equilibrium price and quantity of tea fall. C. There is a movement along the demand curve for tea, but the curve does not shift. D. The demand for tea increases, so the equilibrium price and quantity of tea both rise.

16. [Apply/Analyze] Which event causes a movement along the demand curve for printer ink, rather than a shift of it?

A. The price of printers falls. B. The price of ink falls. C. The number of buyers of ink increases. D. Consumer tastes shift toward printing photos at home.

17. [Apply/Analyze] A new technology lowers the cost of producing solar panels, and demand for solar panels is unchanged. What happens to the equilibrium in the solar panel market?

A. Price rises and quantity rises. B. Price falls and quantity falls. C. Price falls and quantity rises. D. Price rises and quantity falls.

18. [Apply/Analyze] Short answer: In a town, consumer incomes rise and the demand for bus rides falls. Based on the chapter, what type of good are bus rides for these consumers? Explain how you know.

19. [Apply/Analyze] Scenario: A government sets a legal minimum price for milk that is above the market equilibrium price. Using the chapter, name this type of policy, predict what happens in the milk market, and explain why the result lasts.

20. [Apply/Analyze] Scenario: A café owner notices that the café is selling more tea than last month. She has two possible explanations:

• (a) The café lowered its own price of tea.
• (b) Nearby shops raised the price of coffee.

For each explanation, say whether it would cause a movement along the demand curve for the café's tea or a shift of that demand curve. Explain your reasoning.

Answer Key

1. B. As the price of a good rises, the quantity demanded falls. The law of demand describes an inverse relationship between