ECON 252 Homework 2 Review

How would the equilibrium price in a market be affected if there were a large increase in demand and a small increase in supply? A. the equilibrium price increases B. the equilibrium price would remain the same C. the equilibrium price decreases D. more information is needed

A

If people began to believe that SUVs were causing global warming, then the demand for the Toyota Rav4 SUV would: A. decrease (shift left) B. increase (shift right) C. remain unchanged

A

If widespread unemployment leads to a drop in incomes, then the demand for the Toyota Rav4 SUV would: A. decrease (shift left) B. remain unchanged C. increase (shift right)

A

In a perfectly competitive market, if one seller chooses to change a price for its good that is slightly higher than the market price, then it will __________________. A. lose all or most of all its customers B. see no change in its number of customers C. see a small decrease in its number of customers D. all of the above are equally likely

A

How would the equilibrium price in a market be affected if there were a large decrease in demand and a small decrease in supply? A. the equilibrium price increases B. the equilibrium price decreases C. the equilibrium price would remain the same D. more information is needed

B

In a perfectly competitive market, sellers _____________ and buyers _________________. A. cannot charge more than the market price; are able to pay less than the market price B. cannot charge more than the market price; cannot pay less than the market price C. are able to charge more than the market price; cannot pay less than the market price D. are able to charge more than the market price; are able to pay less than the market price

B

Which of the following is NOT one of the five major factors that shifts the demand curve when it changes? A. Income and wealth B. The number of buyers C. The price of the good itself D. The price of substitute goods

C

For a trade to take place, a buyer's willingness to pay must be: A. higher than the seller's willingness to accept B. equal to the seller's willingness to accept C. lower than the seller's willingness to accept D. A and B only E. all of the above

D

Which of the following is NOT one of the four major factors that shifts the supply curve when it changes? A. Prices of inputs used in production B. The scale of sellers C. Seller's beliefs about the future D. The income of consumers

D

How can the Law of Demand be shown numerically?

demand schedule

How can the Law of Demand be shown graphically?

downward-sloping demand curve

The relationship between the two variables of demand can be described as _________________.

negative

The relationship between the two variables of supply can be described as ________________.

positive

The Law of Demand states that as the price of a good increases, the ___________________ decreases

quantity demanded

The Law of Supply states that as the price of a good increases, the ________________ of that good increases.

quantity supplied

When on of the five major factors changes, causing an increase in demand, the demand curve shifts ________________.

right

When one of the four major factors changes, causing an increase in supply, the supply curve shifts __________________.

right

where the increase in the price of one good causes an increase in demand for another

substitutes

How can the Law of Supply be shown numerically?

supply schedule

How can the Law of Supply be graphically shown?

upward-sloping supply curve

The lowest price that a seller is willing to receive to sell an extra unit of a good is called _______________.

willingness to accept

The highest price that a buyer is wiling to pay for an extra unit of a good is called __________________.

willingness to pay