Eco. Chapter 3

In presenting the model of a demand curve, economists presume the most importatnt vairiable in determining the quantity demanded is: the price of the product itself. consumer income. the prices of related goods. consumer tastes.

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

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

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

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The law of supply indicates that: producers will offer more of a product at high prices than they will at low prices. the product supply curve is downsloping. consumers will purchase less of a good at high prices than they will at low prices. producers will offer more of a product at low prices than they will at high prices.

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The relationship between quantity supplied and price is___, and the relationship between quantity demanded and price is__. direct, inverse inverse, direct inverse, inverse direct, direct

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A leftward shift of a product supply curve might be caused by: some firms leaving an industry. an improvement in the relevant technique of production. a decline in the prices of needed inputs. an increase in comsumer incomes.

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A normal good is one: the consumption of which varies directly with incomes. whose amount demanded will increase as its price decreases. whose amount demanded will decrease as its price decreases. whose demand curve will shift leftward as income rise.

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At the point where the demand and supply curves for a product intersect: the quantity that consumers want to purchase and the amount producers choose to sell are the same. the selling price and the buying price need not be equal. the market may, or may not, be in equilibrium. either a shortage or surplus of the product might exist, depending on the degree of competition.

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

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If the price of K declines, the demand curve for the complementary product J will: shift to the right. shift to the left. decrease. remain unchanged.

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In 2007 the price of oil increased, which in turn caused the price of natural gas to rise. This can best be explained by saying that oil and natural gas are: substitute goods and the higher price for oil increased the demand for natural gas. complementary goods and the higher price for oil increased the demand for natural gas. complementary goods and the higher price for oil decreased the supply for natural gas. substitute goods and the higher price for oil decreased the supply of natural gas.

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Other things equal, if the price of a key resource used to produce product X falls, the: product supply curve of X will shift to the right. product demand curve of X will shift to the right. product supply curve of X will shift to the left. product demand curve of X will shift to the left.

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

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If the price of a product increases, we would expect: quantity supplied to increase. demand to decrease. supply to decrease. quantity demanded to increase.

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If two goods are conplements: a decrease in the price of one will increase the demand for the other. they are consumed independently. an increase in the price of one will increase the demand for the other. they are necessarily inferior goods.

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A rightward shift in the demand curve for product C might be caused by: a decrease in the price of a product that is complementary to C. an increase in income if C is an inferior good. a decrease in income if C is a normal good. a decrease in the price of a product that is a close substitute for C.

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

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Assume a drought in the Great Plains reduces the supply of wheat. Since wheat is a basic ingredient in the production of bread, and potatoes are consumer substitute for bread, we would expect the price of wheat to: rise, the supply of bread to decrease, and the demand for potatoes to increase. rise, the supply of bread to increase, and the demand for potatoes to increase. rise, the supply of bread to decrease, and the demand for potatoes to decrease. fall, the supply of bread to increase, and the demand for potatoes to increase.

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Assume, in a competitive market, price is intitally below the equilibrium level. We predict that price will: increase, quantity demanded will decrease, and quantity supplied will increase. decrease, quantity demanded will decrease, and quantity supplied will increase. decrease, quantity demanded and quantity supplied will both decrease. increase, quantity demanded will increase, and quantity supplied will decrease.

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Assuming competitive markets with typical supply and demand curves, which of the following statements is correct? An increase in demand with no change in supply will result in an increase in sales. An increase in supply with a decrease in demand will result in an increase in price. An increase in supply with no change in demand will result in an increase in price. An increase in supply with no change in demand will result in a decline in sales.

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DVD players and DVDs are: complementary goods. substitute goods. independent goods. inferior goods.

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