BM1704

Dela Cruz, Shiela Jane L. BSA-2A

eLMS REVIEW: DEMAND AND SUPPLY

I. TRUE OR FALSE (10 items x 2 points)

TRUE 1. A change in the consumer's income would cause a movement in the demand curve.

TRUE 2. If a customer expects a good's price to be higher in the future, there will be a
higher demand for the good now.

FALSE 3. Two (2) goods are substitutes if an increase in the price of the first good causes an
increase in supply of the second good.

Answer:
Two goods are substitutes if an increase in the price of one causes an increase in
the demand for the other. Two goods are complements if an increase in the price
of one causes a decrease in the demand for the other. A good is a normal good if
an increase in income causes an increase in demand.

FALSE 4. An increase in the level of available technology causes a product's supply to decrease.

Answer:
Technological advances that improve production efficiency will shift a supply
curve to the right. The cost of production goes down, and consumers will demand
more of the product at lower prices. At lower prices, consumers can purchase
more TVs and computers, causing the supply curve to shift to the right.

FALSE 5. A surplus occurs if floor price is below equilibrium price.

Answer:
Price floors prevent a price from falling below a certain level. When a price floor
is set above the equilibrium price, quantity supplied will exceed quantity
demanded. Excess supply or surpluses will result.
 FALSE 6. The law of demand states that there is a negative relationship between
demand
and supply.

Answer:
It's a fundamental economic principle that when supply exceeds demand for a
good or service, prices fall. When demand exceeds supply, prices tend to rise.
There is an inverse relationship between the supply and prices of goods and
services when demand is unchanged.

FALSE7. A decrease in income would cause a buyer to consumer more inferior goods.
goods.

Answer:
In economics, the demand for inferior goods decreases as income increases or
the economy improves. When this happens, consumers will be more willing to
spend on more costly substitutes. Conversely, the demand for an inferior good
increases when incomes fall or the economy contracts.

FALSE 8. In real-life situations, shifts in demand curve are parallel to each other.

Answer:
Factors that can shift the demand curve for goods and services. Causing a
different quantity to be demanded at any given price, include changes in tastes,
population, income, prices of substitute or complement goods, and expectations
about future conditions and prices.

TRUE 9. An anticipated decrease in the price of a good will cause suppliers to

decrease current supply of the good.

TRUE 10. The price floor and price ceiling are both imposed by the government.

02 eLMS Review 1 *Property of STI

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