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The Market Forces of Supply and Demand 1055
62. Individual supply curves are summed vertically to obtain the market supply curve.
a. True
b. False
63. The market supply curve shows how the total quantity supplied of a good varies as input prices
vary, holding constant all the other factors that influence producers’ decisions about how much to
sell.
a. True
b. False
64. A reduction in an input price will cause a change in quantity supplied but not a change in supply.
a. True
b. False
1056 The Market Forces of Supply and Demand
65. An increase in the price of ink will shift the supply curve for pens to the left.
a. True
b. False
66. If there is an improvement in the technology used to produce a good, then the supply curve for
that good will shift to the left.
a. True
b. False
67. Advances in production technology typically reduce firms’ costs.
a. True
b. False
The Market Forces of Supply and Demand 1057
68. If a company making frozen orange juice expects the price of its product to be higher next month,
it will supply more to the market this month.
a. True
b. False
69. When a seller expects the price of its product to decrease in the future, the seller's supply curve
shifts left now.
a. True
b. False
70. Supply and demand together determine the price and quantity of a good sold in a market.
a. True
b. False
1058 The Market Forces of Supply and Demand
71. A market’s equilibrium is the point at which the supply and demand curves intersect.
a. True
b. False
72. At the equilibrium price, quantity demanded is equal to quantity supplied.
a. True
b. False
73. The equilibrium price is the same as the market-clearing price.
a. True
b. False
The Market Forces of Supply and Demand 1059
74. At the equilibrium price, buyers have bought all they want to buy, but sellers have not sold all they
want to sell.
a. True
b. False
75. The actions of buyers and sellers naturally move markets toward equilibrium.
a. True
b. False
76. When the market price is above the equilibrium price, the quantity of the good demanded exceeds
the quantity supplied.
a. True
b. False
1060 The Market Forces of Supply and Demand
77. When the market price is above the equilibrium price, suppliers are unable to sell all they want to
sell.
a. True
b. False
78. In a market, the price of any good adjusts until quantity demanded equals quantity supplied.
a. True
b. False
79. A surplus is the same as an excess demand.
a. True
b. False
The Market Forces of Supply and Demand 1061
80. Sellers respond to a surplus by cutting their prices.
a. True
b. False
81. Price will rise to eliminate a surplus.
a. True
b. False
82. When quantity supplied exceeds quantity demanded at the current market price, the market has a
surplus, and market price will likely rise in the future to eliminate the surplus.
a. True
b. False
1062 The Market Forces of Supply and Demand
83. When the market price is below the equilibrium price, the quantity of the good demanded exceeds
the quantity supplied.
a. True
b. False
84. When the market price is below the equilibrium price, suppliers are unable to sell all they want to
sell.
a. True
b. False
85. A shortage is the same as an excess demand.
a. True
b. False
The Market Forces of Supply and Demand 1063
86. Sellers respond to a shortage by cutting their prices.
a. True
b. False
87. Price will rise to eliminate a shortage.
a. True
b. False
88. When quantity demanded exceeds quantity supplied at the current market price, the market has a
shortage, and market price will likely rise in the future to eliminate the shortage.
a. True
b. False
1064 The Market Forces of Supply and Demand
89. Surpluses drive price up, while shortages drive price down.
a. True
b. False
90. A shortage will occur at any price below equilibrium price and a surplus will occur at any price
above equilibrium price.
a. True
b. False
91. When a supply curve or a demand curve shifts, the equilibrium price and equilibrium quantity
change.
a. True
b. False
The Market Forces of Supply and Demand 1065
92. Demand refers to the amount buyers wish to buy, whereas the quantity demanded refers to the
position of the demand curve.
a. True
b. False
93. Supply refers to the position of the supply curve, whereas the quantity supplied refers to the
amount suppliers wish to sell.
a. True
b. False
94. It is not possible for demand and supply to shift at the same time.
a. True
b. False
1066 The Market Forces of Supply and Demand
95. A decrease in demand will cause a decrease in price, which will cause a decrease in supply.
a. True
b. False
96. An increase in demand will cause an increase in price, which will cause an increase in quantity
supplied.
a. True
b. False
97. An increase in supply will cause a decrease in price, which will cause an increase in demand.
a. True
b. False
The Market Forces of Supply and Demand 1067
98. A decrease in supply will cause an increase in price, which will cause a decrease in quantity
demanded.
a. True
b. False
99. If the demand for movies increases at the same time as the movie industry adopts labor-saving
technology for producing movies, the equilibrium price for movies will increase, but the effect on
the equilibrium quantity of movies is ambiguous.
a. True
b. False
100. Suppose the demand for calendars increases in November. At the same time, the price of the ink
used in the production of calendars increases. In the market for calendars, the equilibrium price
rises, but the effect on the equilibrium quantity is ambiguous.
a. True
b. False
1068 The Market Forces of Supply and Demand
101. Suppose the demand for calendars increases in November. At the same time, the price of the ink
used in the production of calendars increases. In the market for calendars, if the size of the shift
of the demand curve is larger than the size of the shift of the supply curve, then the equilibrium
quantity rises.
a. True
b. False
102. A decrease in the price of blueberries will decrease both the equilibrium price and quantity in the
market for blueberry muffins.
a. True
b. False
The Market Forces of Supply and Demand 1069
103. A decrease in the price of peanut butter will increase both the equilibrium price and quantity in
the market for jelly.
a. True
b. False
104. An increase in the price of blue pens will increase both the equilibrium price and quantity in the
market for black pens.
a. True
b. False
105. An increase in the price of cotton will increase the equilibrium price and decrease the equilibrium
quantity in the market for cotton t-shirts.
a. True
b. False
1070 The Market Forces of Supply and Demand
106. A decrease in the price of creamer will increase the equilibrium price and decrease the
equilibrium quantity in the market for coffee.
a. True
b. False
107. An increase in the price of maple syrup will decrease both the equilibrium price and quantity in
the market for pancakes.
a. True
b. False
108. In a market economy, prices are the signals that guide the allocation of scarce resources.
a. True
b. False
The Market Forces of Supply and Demand 1071
109. a. What is the difference between a "change in demand" and a "change in quantity demanded?"
Graph your answer.
b. For each of the following changes, determine whether there will be a change in quantity
demanded or a change in demand.
i. a change in the price of a related good
ii. a change in tastes
iii. a change in the number of buyers
iv. a change in price
v. a change in consumer expectations
vi. a change in income
1072 The Market Forces of Supply and Demand
110. What is the difference between a "change in supply" and a "change in quantity supplied?" Graph
your answer.
a. For each of the following changes, determine whether there will be a change in quantity
supplied or a change in supply.
i. a change in input costs
ii. a change in producer expectations
iii. a change in price
iv. a change in technology
v. a change in the number of sellers
111.Given the table below, graph the demand and supply curves for flashlights. Make certain to label
the equilibrium price and equilibrium quantity.
Price
Quantity
Demanded Per
Quantity
Supplied Per
$5
6,000
10,000
$4
8,000
8,000
$3
10,000
6,000
$2
12,000
4,000
$1
14,000
2,000
a. What is the equilibrium price and the equilibrium quantity?
b. Suppose the price is currently $5. What problem would exist in the market? What would you
expect to happen to price? Show this on your graph.
c. Suppose the price is currently $2. What problem would exist in the market? What would you
expect to happen to price? Show this on your graph.
1074 The Market Forces of Supply and Demand
112. Fill in the table below, showing whether equilibrium price and equilibrium quantity go up, go
down, stay the same, or change ambiguously.
No Change in Supply
An Increase in Supply
A Decrease in Supply
No Change in
Demand
An Increase in
Demand
A Decrease in
Demand
113. Suppose we are analyzing the market for hot chocolate. Graphically illustrate the impact each of
the following would have on demand or supply. Also show how equilibrium price and equilibrium
quantity would change.
a. Winter starts, and the weather turns sharply colder.
b. The price of tea, a substitute for hot chocolate, falls.
c. The price of cocoa beans decreases.
d. The price of whipped cream falls.
e. A better method of harvesting cocoa beans is introduced.
f. The Surgeon General of the U.S. announces that hot chocolate cures acne.
g. Protesting farmers dump millions of gallons of milk, causing the price of milk to rise.
h. Consumer income falls because of a recession, and hot chocolate is considered a normal
good.
i. Producers expect the price of hot chocolate to increase next month.
j. Currently, the price of hot chocolate is $0.50 per cup above equilibrium.
