1) Demand and supply - Practice questions Demand and supply...

Practice questions: Demand and supply
Demand
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or
answers the question.
1) Suppose the demand for Digital Video Recorders (DVRs) is given by
Q =250 - .25 p + 4 p
c
, where Q is the quantity of DVRs demanded (in
1000s), p is the price of a DVR, and p
c
is the price of cable television.
How much does demand for DVRs change if the p rises by $40?
1) ______
A) increases by 4,000 DVRs
B) increases by 16,000 DVRs
C) drops by 10,000 DVRs
D) drops by 2,500 DVRs
2) Suppose the demand for Digital Video Recorders (DVRs) is given by Q =250
- .25 p + 4 p
c
, where Q is the quantity of DVRs demanded (in 1000s), p is the
price of a DVR, and p
c
is the price of cable television. How much does Q
change if the price of cable changes slightly (i.e. the partial derivative of
demand with respect to p
c
)?
2) ______
3) According to the Law of Demand, the demand curve for a good will 3) ______
4) An increase in the price of pork will lead to 4) ______
5) An increase in consumer incomes will lead to 5) ______
A) no change of the demand curve for plasma TVs.
B) a rightward shift of the demand curve for plasma TVs.
C) a rightward shift of the supply curve for plasma TVs.
D) a movement upward along the demand curve for plasma TVs.

6) The above figure shows a graph of the market for pizzas in a large town. No
pizzas will be demanded unless price is less than
6) ______
SHORT ANSWER. Write the word or phrase that best completes each statement or answers
the question.
For the following, please answer "True" or "False" and explain why.
7) If a good is not produced, then there is no demand for it. 7) ______
8) During the winter of 1997-1998, the northeastern United States experienced
warmer than usual conditions. The price of home heating oil was less than it
was during the previous winter, but people bought less home heating oil. This
contradicts the Law of Demand.
8) ______
9) Suppose N consumers each have an identical demand curve for a good is
given by Q = a-bp , where Q is the quantity demanded, p is the price, and a and
b are positive constants. What is the market demand curve? Is the slope (in
price) of the market demand greater or less than the slope of each individual
demand curve?
9) ______

Supply
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or
answers the question.
10) The above figure shows a graph of the market for pizzas in a large town.
No pizzas will be supplied unless the price is above
10) ______