ECON 2113 Chapter 4
20) If a good is inferior, then an increase in income will result in
A) a decrease in the demand for the good
3) In a competitive market, the quantity of a product produced and the price of the product are determined by
A) all buyers and sellers
11) When we move along a given demand curve,
A) all nonprice determinants of demand are held constant.
4) In competitive markets, buyers
A) and sellers are price takers
7) An increase in the price of a good will
A) decrease quantity demanded
21) Good X and good Y are substitutes. If the price of good Y increases, then the
A) demand for good X will increase Explanation: If two goods are substitutes, when one's price rises, then it's demand will fall, causing the demand for a substitute to rise.
10) The law of demand states that, other things equal, when the price of a good
A) falls, the quantity demanded for the good rises.
19) If a good is normal, then an increase in income will result in a(n)
A) increase in the demand for the good
13) The market demand curve
A) is the sum of all individual demand curves
22) If goods A and B are complements, then an increase in the price of good A will result in
A) less of good B being sold Explanation: If two goods are complements, their prices and demands rise and fall with each other. If the price of Good A increases, then quantity demanded of Good A will DECREASE. If the quantity demanded of Good A decreases then so does the quantity demanded of Good B, leading to less of Good B being sold.
6) A decrease in quantity demanded
A) results in a movement upward and to the left along a demand curve
17) An increase in demand is represented by a
A) rightward shift of a demand curve
12) When quantity demanded increases at every possible price, the demand curve has
A) shifted to the right
1) The forces that make market economies work are
A) supply and demand
2) In a market economy,
A) supply and demand determine prices and prices, in turn allocate the economy's scarce resources.
5) Assume the market for tennis balls is perfectly competitive. When one tennis ball producer exits the market,
A) the price of tennis balls does not change
18) A movement along the demand curve might be caused by a change in
A) the price of the good or service that is being demanded