Econ 202 CH 3

27. DVD players and DVDs are: A. complementary goods. B. substitute goods. C. independent goods. D. inferior goods.

A. complementary goods.

7. The relationship between quantity supplied and price is _____ and the relationship between quantity demanded and price is ____. A. direct, inverse B. inverse, direct C. inverse, inverse D. direct, direct

A. direct, inverse

3. The law of demand states that, other things equal: A. price and quantity demanded are inversely related. B. the larger the number of buyers in a market, the lower will be product price. C. price and quantity demanded are directly related. D. consumers will buy more of a product at high prices than at low prices.

A. price and quantity demanded are inversely related.

63. An increase in product price will cause: A. quantity demanded to decrease. B. quantity supplied to decrease. C. quantity demanded to increase. D. the supply curve to shift to the left.

A. quantity demanded to decrease.

18. When the price of Nike soccer balls fell, Ronaldo purchased more Nike soccer balls and fewer Adidas soccer balls. Which of the following best explains Ronaldo's decision to buy more Nike soccer balls? A. the substitution effect B. the income effect C. an increase in the demand for Nike soccer balls D. the price effect

A. the substitution effect

61. Assume that the demand curve for product C is downsloping. If the price of C falls from $2.00 to $1.75: A. a smaller quantity of C will be demanded. B. a larger quantity of C will be demanded. C. the demand for C will increase. D. the demand for C will decrease.

B. a larger quantity of C will be demanded.

23. Which of the following would not shift the demand curve for beef? A. a widely publicized study that indicates beef increases one's cholesterol B. a reduction in the price of cattle feed C. an effective advertising campaign by pork producers D. a change in the incomes of beef consumers

B. a reduction in the price of cattle feed

20. A recent study found that an increase in the Federal tax on beer (and thus an increase in the price of beer) would reduce the demand for marijuana. We can conclude that: A. beer and marijuana are substitute goods. B. beer and marijuana are complementary goods. C. beer is an inferior good. D. marijuana is an inferior good.

B. beer and marijuana are complementary goods.

9. A demand curve: A. shows the relationship between price and quantity supplied. B. indicates the quantity demanded at each price in a series of prices. C. graphs as an upsloping line. D. shows the relationship between income and spending.

B. indicates the quantity demanded at each price in a series of prices.

22. Which of the following will not cause the demand for product K to change? A. a change in the price of close-substitute product J B. an increase in incomes of buyers of product K C. a change in the price of K D. a change in consumer tastes for K

C. a change in the price of K

26. If two goods are complements: A. they are consumed independently. B. an increase in the price of one will increase the demand for the other. C. a decrease in the price of one will increase the demand for the other. D. they are necessarily inferior goods.

C. a decrease in the price of one will increase the demand for the other.

32. A shift to the right in the demand curve for product A can be most reasonably explained by saying that: A. consumer incomes have declined, and consumers now want to buy less of A at each possible price. B. the price of A has increased and, as a result, consumers want to purchase less of it. C. consumer preferences have changed in favor of A so that they now want to buy more at each possible price. D. the price of A has declined and, as a result, consumers want to purchase more of it.

C. consumer preferences have changed in favor of A so that they now want to buy more at each possible price.

11. An increase in the price of a product will reduce the amount of it purchased because: A. supply curves are upsloping. B. the higher price means that real incomes have risen. C. consumers will substitute other products for the one whose price has risen. D. consumers substitute relatively high-priced for relatively low-priced products.

C. consumers will substitute other products for the one whose price has risen.

35. If Z is an inferior good, an increase in money income will shift the: A. supply curve for Z to the left. B. supply curve for Z to the right. C. demand curve for Z to the left. D. demand curve for Z to the right.

C. demand curve for Z to the left.

1. A market: A. reflects upsloping demand and downsloping supply curves. B. entails the exchange of goods, but not services. C. is an institution that brings together buyers and sellers. D. always requires face-to-face contact between buyer and seller.

C. is an institution that brings together buyers and sellers.

5. The demand curve shows the relationship between: A. money income and quantity demanded. B. price and production costs. C. price and quantity demanded. D. consumer tastes and quantity demanded.

C. price and quantity demanded.

59. The term "quantity demanded": A. refers to the entire series of prices and quantities that comprise the demand schedule. B. refers to a situation in which the income and substitution effects do not apply. C. refers to the amount of a product that will be purchased at some specific price. D. means the same thing as demand.

C. refers to the amount of a product that will be purchased at some specific price.

4. Graphically, the market demand curve is: A. steeper than any individual demand curve that is part of it. B. greater than the sum of the individual demand curves. C. the horizontal sum of individual demand curves. D. the vertical sum of individual demand curves.

C. the horizontal sum of individual demand curves.

13. When the price of a product rises, consumers shift their purchases to other products whose prices are now relatively lower. This statement describes: A. an inferior good. B. the rationing function of prices. C. the substitution effect. D. the income effect.

C. the substitution effect.

What are the determinants of demand, and what do they change?

Consumer taste and preference Number of buyers Income Prices of related goods Consumer expectations They change demand, aka shift.

21. In the past few years, the demand for donuts has greatly increased. This increase in demand might best be explained by: A. an increase in the cost of making donuts. B. an increase in the price of coffee. C. consumers expecting donut prices to fall. D. a change in buyer tastes.

D. a change in buyer tastes.

25. An economist for a bicycle company predicts that, other things equal, a rise in consumer incomes will increase the demand for bicycles. This prediction assumes that: A. there are many goods that are substitutes for bicycles. B. there are many goods that are complementary to bicycles. C. there are few goods that are substitutes for bicycles. D. bicycles are normal goods.

D. bicycles are normal goods.

34. If X is a normal good, a rise in money income will shift the: A. supply curve for X to the left. B. supply curve for X to the right. C. demand curve for X to the left. D. demand curve for X to the right.

D. demand curve for X to the right.

17. One reason that the quantity demanded of a good increases when its price falls is that the: A. price decline shifts the supply curve to the left. B. lower price shifts the demand curve to the left. C. lower price shifts the demand curve to the right. D. lower price increases the real incomes of buyers, enabling them to buy more.

D. lower price increases the real incomes of buyers, enabling them to buy more.