Macroeconomics Quiz Chapter 3

Assume product A is an input in the production of product B. In turn product B is a complement to product C. We can expect a decrease in the price of A to: A. increase the supply of B and increase the demand for C B. decrease the supply of B and increase the demand for C C. Decrease the supply of B and decrease the demand for c D. increase the supply of B and decrease the demand for C

A

Markets, viewed from the perspective of the supply and demand model: A. Assume many buyers and many sellers of a standardized product. B. Assume market power so that buyers and sellers bargain with one another C. Do not exist in the real-world economy D. Are approximated by markets in which a single seller determines price

A

A decrease in supply, holding constant, will cause: A. Higher prices and a larger quantity sold B. Higher prices and a smaller quantity sold C. Lower prices and a smaller quantity sold D. Lower prices and a larger quantity sold

B

The upward slope of the supply curve reflects the: A. Principle of specialization in production B. Law of supply C. Fact that price and quantity supplied are inversely related D. Law of diminishing marginal utility

B

All markets involve the following elements, except: A. demand or buyers B. face-to-face negotiation C. Prices of goods and services D.Supply of sellers

B.

Which of the following statements is correct? A. If demand increases and supply decreases, equilibrium price will fall B. If supply increases and demand decreases, equilibrium price will fall C. If demand decreases and supply increases equilibrium price will rise D. If supply declines and demand remains constant equilibrium price will fall

B. If supply increases and demand decreases, equilibrium price will fall

Suppose that in 2007, Ford sold 500,000 Mustangs at an average price of 18,800 per car; in 2008, 600,000 mustangs were sold at an average price of 19,500 per car. These statements: A. Suggest taht the demand for Mustangs decreased between 2007 and 2008 B. Suggest that the supply of Mustangs must have increased between 2007 and 2008 C. Suggest that the demand for mustangs increased between 2007 and 2008 D. Constitute an exception to the law of demand in that they suggest an upsloping demand curve

C

Which statement best illustrates the concept of diminishing marginal utility? A. As one consumes more hamburgers per week, one would be willing to pay a higher price for additional hamburgers. B. Some consumers will receive less satisfaction from consuming hamburgers than from consuming fried chicken C. A typical consumer will receive less satisfaction from consuming the fourth hamburger than from the third hamburger in a week D. A decrease in the price of hamburgers will cause consumers to buy more hamburgers because they can afford to buy more

C

Black Markets are associated with A. Price floors and the resulting product surpluses. B. Price floors and the resulting product shortages c. Ceiling prices and the resulting product shortages D. Ceiling prices and the resulting product surpluses

C. Ceiling prices and the resulting product shortages

Buyers and sellers do not have to deal face-to-face with one another in markets T/F?

True

If the newspapers report that there is a shortage of strawberries, it must mean that the current price of strawberries is below the equilibrium price. T/F

True

The development of a new production technique that lowers the cost of producing 3-D movies will shift the supply curve of 3-D movies to the right T/F?

True

Which statement is true about supply? A. There is an inverse relationship between price and quantity supplied B. Supply refers to the amount of inventory that sellers have in their warehouses C. As price decreases, producers are willing to put more of the good on the market for sale D. To entice producers to offer more of a good on the market for sale, price must rise.

D

An economist for a bicycle company predicts that, other things equal, a rise in consumer incomes will increase the demand for bicycles. This prediction is based on the assumption 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 D. Bicycles are normal goods

D. Bicycles are normal goods

Price floors and ceiling prices both: A. cause shortages B. cause surpluses C. cause the supply and demand curves to shift until equilibrium is established D. Interfere with the rationing function of prices

D. interfere with the rationing function of prices

The law of demand states that, other things equal:

price and quantity demanded are inversely related

Running shoes and staplers are: A. substitute goods B. complementary goods C. inferior goods D. Independent goods

independent goods.