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php 13th of February, 2017

Worksheet 1 of 2 – Week3 Demand and Supply (Ch3)

3) Which of the following is NOT true
concerning a society's production
Competitive market possibilities frontier (PPF)? *
a) It reveals the maximum amount
1) Is a competitive market one that, of any two goods that can be
a) has many buyers and many sellers produced from a given quantity
that no single buyer or seller can of resources.
influence the price. b) Tradeoffs occur when moving
b) has many buyers and many sellers along a PPF.
that each buyer or seller can c) Production efficiency occurs
influence the price. when production is on the
c) has few buyers and few sellers that frontier itself.
determine the prices. d) Consumers will receive equal
d) producers sell at a price high benefits from the two goods
enough to cover their opportunity illustrated in the PPF.
cost
e) consumers respond to changing 4) If the money price of wheat increases
opportunity cost by seeking and no other prices change, the
cheaper alternatives to expensive a) relative price of wheat falls.
items. b) opportunity cost of wheat rises.
f) has only got competitive firms c) demand for wheat increases.
buying goods d) relative price of wheat is
unaffected.
Which of the above statements are
are true? 5) The opportunity cost of a hot dog in
terms of hamburgers is the
a) I, II, V, a) ratio of the slope of the demand
b) II, III, VI curve for hot dogs to the slope
c) II, IV, V, VI of the demand curve for
d) I, IV, V hamburgers.
e) I, II, III, IV, V b) ratio of the slope of the supply
curve for hot dogs to the slope
2) The relative price of a good is of the supply curve for
a) an opportunity cost. hamburgers.
b) equal to the money price of a c) money price of a hot dog minus
good. the money price of a hamburger.
c) equal to the price of that good d) ratio of the money price of a hot
divided by the quantity dog to the money price of a
demanded of the good. hamburger.
d) what you get paid for babysitting
your cousin.

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Worksheet 1 of 2 – Week3 Demand and Supply (Ch3)

Demand 3) As the relative price of a good falls, the
substitution effect implies that people
1) Demands differ from wants because buy
a) demands are unlimited, whereas a) less of that good and more of its
wants are limited by income. substitutes.
b) wants require a plan to acquire a b) more of that good and less of its
good but demands require no substitutes.
such plan. c) less of that good and less of its
c) wants imply a decision about substitutes.
which demands to satisfy, while d) more of that good and more of
demands involve no specific plan its substitutes.
to acquire the good.
d) demands reflect a decision 4) When the price of a pizza decreases
about which wants to satisfy and from R14 to R12,
a plan to buy the good, while a) the income effect means people
wants are unlimited and involve buy less pizza.
no specific plan to acquire the b) the income effect points out that
good. the total purchasing power of
people who buy pizza increases.
2) The "law of demand" states that c) the income effect means that
changes in the demand for pizza will not
a) demand are related directly to change.
changes in supply. d) None of the above answers is
b) the quantity demanded of a correct.
good are not related to changes
in the quantity supplied. 5) For normal goods which of the following
c) the quantity demanded of a explains why demand curves slope
good are inversely related to downward?
changes in its price. a) prices and income
d) demand are inversely related to b) substitutes and complements
changes in supply. c) resources and technology
d) substitution effect and income
effect

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http://learn.sun.ac.za/mod/clicker/click.php 13th of February, 2017
Worksheet 1 of 2 – Week3 Demand and Supply (Ch3)

Supply 4) To say that "supply increases" for any
reason, means there is a
1) The "law of supply" refers to the fact a) movement rightward along a
that, all other things remaining the supply curve.
same, when the price of a good rises b) movement leftward along a
a) the supply curve shifts leftward. supply curve.
b) the supply curve shifts c) shift rightward in the supply
rightward. curve.
c) there is a movement up along d) shift leftward in the supply
the supply curve to a larger curve.
quantity supplied.
d) there is a movement down along 5) Which of the following leads to a
the supply curve to a smaller movement along the supply curve for
quantity supplied. shredded wheat but does not shift the
supply curve for shredded wheat?
2) Each point on a supply curve represents a) a fall in the price of shredded
a) the highest price buyers will pay wheat
for the good. b) an increase in the cost of
b) the lowest price for which a machinery used to shred wheat
supplier can profitably sell c) perfect weather conditions that
another unit. resulted in a large wheat crop
c) the lowest price buyers will d) a decrease in the number of
accept per unit of the good. shredded wheat producers
d) the highest price sellers can get
for each unit over time.

3) An increase in the number of fast-food

restaurants
a) raises the price of fast-food
meals.
b) increases the demand for fast-
food meals.

c) increases the supply of fast-food
meals.

d) increases the demand for
substitutes for fast-food meals.
Topic: Change in Supply, Number of

Suppliers

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http://learn.sun.ac.za/mod/clicker/click.php 13th of February, 2017
Worksheet 1 of 2 – Week3 Demand and Supply (Ch3)

Prices and Quantities
1) When a market is in equilibrium,
a) everyone has all they want of
the commodity in question.
b) there is no shortage and no
surplus at the equilibrium price.
c) the number of buyers is exactly
equal to the number of sellers.
d) the supply curve has the same
slope as the demand curve.

2) The existence of a shortage
a) means resources are being
allocated efficiently 4) In the above figure, if the price is $8
b) is impossible in a market then there is a
economy a) surplus of 100.
c) pushes the price up b) surplus of 200.
d) pushes the price down c) shortage of 100.
d) shortage of 200.
3) When there is a surplus in the market,
the quantity sold is 5) Based on the above figure, which of the
a) equal to the quantity supplied. following is true?
b) equal to the quantity demanded. a) At a price of $6, quantity
c) less than the quantity demanded is equal to quantity
demanded. supplied.
d) greater than the quantity b) At a price of $4, quantity
bought. demanded is greater than
quantity supplied.
c) At a price of $8, quantity
demanded is less than quantity
supplied.
d) All of the above answers are
correct.

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http://learn.sun.ac.za/mod/clicker/click.php 13th of February, 2017
Worksheet 1 of 2 – Week3 Demand and Supply (Ch3)

Demand and Supply for 4) Which of the following always lowers
the equilibrium price?
Predictions about a) an increase in both demand and
supply
changes b) a decrease in both demand and
supply
1) When demand increases, the c) an increase in demand combined
equilibrium price ________ and the with a decrease in supply
equilibrium quantity ________. d) a decrease in demand combined
a) rises; decreases with an increase in supply

b) falls; decreases
5) Which of the following always raises the
c) rises; increases equilibrium price?
d)falls; increases a) an increase in both demand and
supply
b) a decrease in both demand and
supply
2) You observe that the price of a good
c) an increase in demand combined
rises and the quantity decreases. These
with a decrease in supply
observations can be the result of the
d) a decrease in demand combined
a) demand curve shifting
with an increase in supply
rightward.

b) demand curve shifting leftward.
c) supply curve shifting rightward.
d) supply curve shifting leftward.


3) If both demand and supply increase,
what will be the effect on the
equilibrium price and quantity?
a) Both the price and the quantity
will increase.
b) The quantity will increase but
the price could either rise, fall, or
remain the same.
c) The price will fall but the
quantity will increase.
d) The price will rise but the
quantity could either increase,
decrease, or remain the same.

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http://learn.sun.ac.za/mod/clicker/click.php 13th of February, 2017
Worksheet 1 of 2 – Week3 Demand and Supply (Ch3)

8) The above figure shows the market for
pizza. Which figure shows the effect of
an increase in the price of sandwiches,
which for consumers are substitutes for
pizza?
a) Figure A
b) Figure B
c) Figure C
d) Figure D

9) The above figure shows the market for
pizza. Which figure shows the effect of
an increase in the price of the tomato
sauce used to produce pizza?
a) Figure A
b) Figure B
c) Figure C
d) Figure D

6) The above figure shows the market for 10) The above figure shows the market for
pizza. Which figure shows the effect of a pizza. Which figure shows the effect of a
decrease in the price of a hamburger, new report by the U.S. Surgeon General
which for consumers is a substitute for that eating pizza lowers cholesterol
pizza? levels, an outcome many people want?
a) Figure A a) Figure A
b) Figure B b) Figure B.
c) Figure D c) Figure C
d) Figures B and C d) Figure D

7) The above figure shows the market for

pizza. Which figure shows the effect of
an increase in the price of a
complement such as soda?
a) Figure A
b) Figure B
c) Figure C
d) Figure D

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http://learn.sun.ac.za/mod/clicker/click.php 13th of February, 2017
Worksheet 1 of 2 – Week3 Demand and Supply (Ch3)

13) In the above figure, if D2 is the original
demand curve and the price of a
substitute in consumption rises, which
price and quantity might result?
a) point a, with price P2 and
quantity Q2
b) point b, with price P1 and
quantity Q1
c) point c, with price P3 and
quantity Q3
d) point d, with price P1 and
quantity Q3

11) In the above figure, a change in quantity
demanded with unchanged demand is
represented by a movement from

a) point a to point e.
b) point a to point b.
c) point a to point c.
d) None of the above represent a
change in the quantity
demanded with an unchanged
demand.

12) In the above figure, a change in quantity
supplied with unchanged supply is

represented by a movement from
a) point a to point e.
b) point b to point a.

c) point e to point c.
d) point b to point e.

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http://learn.sun.ac.za/mod/clicker/click.php 13th of February, 2017
Worksheet 1 of 2 – Week3 Demand and Supply (Ch3)

Suppose the market for woolen scarves in
Ch3 Slides Homework Stellenbosch is served by three sellers.
$
Compared to last year, real car prices Rudy’s supply is 𝑄" = 𝑃 − 60, Jody’s
%
stayed the same, but the quantity of cars $
supply is 𝑄" = 𝑃 − 40 and Penny’s supply
sold increased by 20 per cent. A possible %
$
explanation for this is that supply increased is 𝑄" = 𝑃 − 40. At which price will the
+
while demand also increased. combined quantity supplied by all three
a) True sellers be 500 units?

b) False a) 180

b) 250

If the price of fuel decreases, we would c) 320

expect that the price of bus tickets will also d) 480
decrease, ceteris paribus. Therefore, the

price of bus tickets is determined by the
marginal cost of bus companies and is not
affected by the marginal benefit of
passengers.
a) True
b) False

Suppose the relative price for a toasted
sandwich is 1/3 pizzas and the relative price
of a pizza is two hamburgers. What is the
relative price of a hamburger in terms of
toasted sandwiches?
1
a) /2 toasted sandwich
b) 1 toasted sandwich
2
c) /3 toasted sandwich
d) 1.5 toasted sandwiches