Exam 4: The Market Forces of Supply and Demand: Part B

The law of demand is true for most goods in the economy.

Individual demand curves are summed horizontally to obtain the market demand curve.

Sellers respond to a shortage by cutting their prices.

An increase in the price of maple syrup will decrease both the equilibrium price and quantity in the market for pancakes.

Individual demand curves are summed vertically to obtain the market demand curve.

The quantity demanded of a product is the amount that buyers are willing and able to purchase at a particular price.

If a determinant of demand other than price changes,the demand curve shifts.

If something happens to alter the quantity demanded at any given price,then the demand curve shifts.

Most markets in the economy are highly competitive.

Price cannot fall so low that some sellers choose to supply a quantity of zero.

A decrease in demand shifts the demand curve to the left.

The law of supply states that,other things equal,when the price of a good falls,the quantity supplied falls as well.

Price will rise to eliminate a shortage.

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.

Baseballs and baseball bats are substitute goods.

An increase in the price of cotton will increase the equilibrium price and decrease the equilibrium quantity in the market for cotton t-shirts.

Individual supply curves are summed vertically to obtain the market supply curve.

It is not possible for demand and supply to shift at the same time.

A decrease in the price of sugar will shift the supply curve for cookies to the right.

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.