University of Lethbridge – Department of Economics

ECON 3030 – Managerial Economics

Instructor: Michael G. Lanyi
Summer 2013

Demand Supply Equilibrium – ADDITIONAL HELP

Answer Sheet

1) ________ 8) ________ 15) ________ 22) ________ 29) ________

2) ________ 9) ________ 16) ________ 23) ________ 30) ________
3) ________ 10) ________ 17) ________ 24) ________ 31) ________
4) ________ 11) ________ 18) ________ 25) ________ 32) ________
5) ________ 12) ________ 19) ________ 26) ________ 33) ________
6) ________ 13) ________ 20) ________ 27) ________ 34) ________
7) ________ 14) ________ 21) ________ 28) ________ 35) ________
ECON1010 Introduction to Microeconomics Michael G. Lanyi

1) Which of the following best defines quantity demanded?

A) The amount an individual purchases at its current price.
B) The amount an individual purchases at his or her current income.
C) The amount, per time period, that is desired at a given price.
D) The amount, per time period, an individual desires and is able to purchase at the given price.
E) The various amounts that a society desires at all relevant prices.

2) Ceteris paribus means

A) other things being equal.
B) and so forth.
C) knowledge gained before the study of evidence is made.
D) among other things.
E) in a historical context.

3) The "law of demand" hypothesizes that, other things being equal,

A) the lower the price, the greater the demand.
B) price and demand vary inversely.
C) the higher the price, the lower the quantity demanded.
D) the higher the income, the higher the quantity demanded.
E) price and quantity demanded are positively related.

4) To say that the demand curve for movies is negatively sloped means that
A) less quantity will be demanded at lower prices.
B) less quantity will be demanded as preferences change.
C) less quantity will be demanded at higher prices.
D) more quantity will be demanded as consumers' income increases.
E) less quantity will be demanded at the same price.

5) A change in demand is said to take place when there is a

A) movement along the demand curve.
B) shift of the demand curve.
C) shift of the supply curve.
D) price change.
E) quantity change.

6) A normal good is one

A) that everyone normally consumes.
B) that normal people consume.
C) for which demand varies directly with household income.
D) for which demand varies inversely with household income.
E) for which demand does not vary with household income.

7) "Demand" in a particular market refers to

A) only the quantity demanded by households at current market prices.
B) the quantity purchased at the current market price.
C) the quantity that is desired but not satisfied by current supply.
D) the entire relationship between quantity demanded and price.
E) the relationship between demand and supply.

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ECON1010 Introduction to Microeconomics Michael G. Lanyi

8) Consider butter and margarine, which are substitutes. When the price of butter falls, the demand curve for margarine is
likely to
A) shift to the right.
B) shift to the left.
C) remain stationary.
D) remain stationary, although its price will fall.
E) remain stationary, although its price will rise.

9) If the price of tea falls and as a consequence the demand for sugar rises, then tea and sugar are
A) substitute goods.
B) complementary goods.
C) luxury goods.
D) neutral goods.
E) independent goods.

10) If goods X and Y are complements and the price of X falls, all other things being equal, the demand curve for Y will
A) shift to the left.
B) shift to the right.
C) not shift at all.
D) unable to determine.

11) Consider the following two statements. (1) An increase in the price of eggs will cause a decrease in the demand for
eggs. (2) An increase in the price of eggs will cause a decrease in the demand for bacon. In which of these two statements is
the term "demand" used correctly?
A) neither statement
B) the first statement only
C) the second statement only
D) both statements
E) more information is needed

12) Which of the following events would a change in the quantity demanded for some commodity but NOT a change in
the demand for that commodity?
A) a change in average household income.
B) a change in the distribution of income.
C) a change in population.
D) a change in tastes in favour of the commodity.
E) a change in the price of the commodity.

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ECON1010 Introduction to Microeconomics Michael G. Lanyi

13) If demand is given by the curve D, the _____________ energy-efficient light bulbs is 200 000 at a price of $9.
A) demand for
B) quantity purchased of
C) demand schedule for
D) quantity demanded of
E) quantity sold of

14) Refer to Figure 3-1. The movement along the demand curve, D, from point v to point x, could be caused by
A) a change in preferences away from ordinary light bulbs to energy-efficient light bulbs.
B) a change in the price of energy-efficient light bulbs.
C) an increase in household income, which allows consumers to purchase more light bulbs.
D) a change in the price of ordinary light bulbs.
E) an expectation that new, government regulations will require the use of energy-efficient light bulbs only.

15) Refer to Figure 3-1. A shift of the demand curve for energy-efficient light bulbs from D to D2 could be caused by
A) an increase in the price of ordinary light bulbs.
B) a change in preferences away from ordinary bulbs to energy-efficient bulbs.
C) an expectation that new government regulation will require the use of energy-efficient light bulbs only.
D) a decrease in the price of energy-efficient light bulbs.
E) a news bulletin stating that energy-efficient light bulbs emit a harmful gas.

16) Suppose that the demand curves for goods A, B, and C have the following functional forms:, where Q denotes quantity
demanded and P denotes price:
QA = 120 - 3.5 PA - 6PB QB = 100 - 2PB + 3PC QC = 1500 - 0.5PC.
Based on these demand curves, which of the following pairs of goods are known to be complements?
A) B and C
B) A and C
C) A and B
D) A and C, and B and C
E) None of the pairs are complements.

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ECON1010 Introduction to Microeconomics Michael G. Lanyi

17) The positive slope of a supply curve indicates that

A) as price goes up, quantity supplied will decrease.
B) consumers will want to buy less at higher prices.
C) as price goes up, quantity supplied will increase.
D) if the costs of production increase, the quantity supplied will increase.
E) as price goes up, quantity supplied will remain constant.

FIGURE 3-2

18) Refer to Figure 3-2. A shift of the supply curve for energy-efficient light bulbs from S to could be caused by
A) an increase in the price of energy-efficient light bulbs.
B) a decrease in the price of energy-efficient light bulbs.
C) an increase in the number of suppliers.
D) the elimination of government subsidies to suppliers of energy-efficient light bulbs.
E) a change in preferences toward energy-efficient light bulbs.

19) Suppose there is a decrease in the quantity supplied of copper at each price. This change would imply
A) a shift to the left of the supply curve.
B) a shift to the right of the supply curve.
C) a movement up the supply curve.
D) a movement down the supply curve.

20) In which statement is the term "supply" used correctly? (1) An increase in the price of leather will cause a decrease in
the supply of leather. (2) An increase in the price of leather will cause a decrease in the supply of leather boots.
A) the second statement only
B) neither statement
C) the first statement only
D) both statements
E) not enough information to tell

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ECON1010 Introduction to Microeconomics Michael G. Lanyi

21) An equilibrium price is the

A) price in the middle of supply and demand.
B) price at which quantity demanded of the commodity is equal to the quantity supplied.
C) price that consumers are willing to pay.
D) price that producers want to charge.
E) price at which demand for the commodity is equal to supply.

22) Excess demand is the same thing as

A) excess supply.
B) the area to the left of the equilibrium price on a supply and demand diagram.
C) quantity demanded exceeding quantity supplied.
D) quantity supplied exceeding quantity demanded.
E) the area to the right of the equilibrium price on a supply and demand diagram.

FIGURE 3-4

23) Refer to Figure 3-4. The market for 1-bedroom apartments in Collegetown will be in equilibrium at a price and
quantity combination of
A) $500; 300 apartments.
B) $700; 450 apartments.
C) $500; 350 apartments.
D) $300; 250 apartments.
E) $400; 300 apartments.

24) Refer to Figure 3-4. If the price of 1-bedroom apartments in Collegetown were $700, there would be a ________ of
________ apartments.
A) surplus; 150
B) shortage; 300
C) shortage; 150
D) surplus; 300
E) surplus; 100

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ECON1010 Introduction to Microeconomics Michael G. Lanyi

The supply and demand schedules for dozens of roses are given below:

Price Quantity Supplied per period Quantity Demanded per period

$10 200 500
$20 300 450
$30 400 400
$40 500 350
$50 600 300
TABLE 3-1

25) Refer to Table 3-1. The equilibrium price for a dozen roses is ________.
A) $10
B) $20
C) $30
D) $40
E) $50

26) Refer to Table 3-1. How many dozens of roses would actually be purchased if the price in this market were $10?
A) 200
B) 300
C) 350
D) 400
E) 500

FIGURE 3-5

27) Refer to Figure 3-5. If supply and demand were to increase simultaneously, this would lead to
A) an increase in P and in Q.
B) a decrease in P and in Q.
C) an increase in Q and an indeterminate change in P.
D) an increase in P and an indeterminate change in Q.
E) no change in P or Q.

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ECON1010 Introduction to Microeconomics Michael G. Lanyi

FIGURE 3-6

28) Refer to Figure 3-6. If the initial demand and supply curves are D1 and S1, and demand shifts to D2, then
A) a permanent shortage of X will result.
B) a surplus of Q1Q3 will occur.
C) a shortage will occur at any price above P3.
D) if price remained at P2, a shortage of Q1Q3 would exist.
E) all of the above

29) Weekend train travel costs less than weekday train travel. If the supply of train service remains the same between
weekdays and weekends, then the most likely explanation for this difference in price is that the weekend
A) demand curve is to the left of the weekday demand curve.
B) demand curve is to the right of the weekday demand curve.
C) demand curve is random.
D) supply curve is to the right of the weekday supply curve.
E) supply curve is to the left of the weekday supply curve.

30) Consider a negatively sloped demand curve for natural gas. If the supply of natural gas increases, the new equilibrium
will have
A) a lower price and a greater quantity.
B) a lower price and a smaller quantity.
C) a higher price and a smaller quantity.
D) a higher price and a larger quantity.
E) the same price and larger quantity.

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ECON1010 Introduction to Microeconomics Michael G. Lanyi

31) Which of the following statements is correct for a market with an upward-sloping supply curve and a
downward-sloping demand curve?
A) If the supply curve shifts left and demand remains constant, equilibrium quantity will rise.
B) If the supply curve shifts right and the demand curve remains constant, equilibrium price will rise.
C) If the demand curve shifts left and the supply curve shifts right, equilibrium price will rise.
D) If the demand curve shifts right and the supply curve shifts left, equilibrium price will rise.
E) If the demand curve shifts left and the supply curve shifts left, equilibrium price will fall.

32) Assume that apples and oranges are substitute goods. Given the initial supply and demand curves for apples, a
reduction in the price of oranges will tend to
A) increase the price of apples.
B) increase the demand for apples.
C) increase the demand for oranges.
D) decrease the demand for oranges.
E) decrease the price of apples

33) If a demand curve and a supply curve can be stated functionally as Qd = 100 - 5P; and Qs = 90 + 5P, respectively, then
the equilibrium quantity and price (Q, P) would be
A) 95; 1.
B) 1; 95.
C) 190; 1.
D) 95; 10
E) 190; 10.

34) Suppose we observe that movie theatre prices are less during the daytime than in the evening. If the supply of movies
does not change between daytime and evening, then the most likely explanation for this difference in price is
A) the evening demand curve is to the left of the daytime demand curve.
B) the evening demand curve is to the right of the daytime demand curve.
C) the evening supply curve is to the left of the daytime supply curve.
D) the evening supply curve is to the right of the daytime supply curve.

35) Suppose that the price of good X increases from $3.00 to $4.00 while the price of good Y increases from $150 to $200.
The relative price of X (in terms of Y)
A) has fallen.
B) has risen.
C) remained constant.
D) cannot be determined from the above data.
E) is completely unrelated to the price of good Y.

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ECON1010 Introduction to Microeconomics Michael G. Lanyi

University of Lethbridge – Department of Economics

ECON 3030 – Managerial Economics
Instructor: Michael G. Lanyi
Summer 2013

Demand Supply Equilibrium – ADDITIONAL HELP

1) D 8) B 15) E 22) C 29) A
2) A 9) B 16) C 23) E 30) A
3) C 10) B 17) C 24) D 31) D
4) C 11) C 18) D 25) C 32) E
5) B 12) E 19) A 26) A 33) A
6) C 13) D 20) A 27) C 34) B
7) D 14) B 21) B 28) D 35) C

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