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Chapter 03
ECON Chapter 03 Study Questions
| Question | Answer |
|---|---|
| Which of the following illustrates the law of demand? | a and c |
| A demand schedule is a numerical tabulation of | prices and quantities demanded |
| An increase in the number of buyers in a particular market will result in a | rightward shift in the demand curve. |
| As the price of good X rises, the demand for good Y falls. Therefore, goods X and Y are | complements. |
| "As the price of apples goes up, the demand for apples goes down." The author of this statement | uses the word "demand" when he should use the words "quantity demanded." |
| Which of the following is true about the relationship between price and quantity supplied? | There is usually a direct relationship. |
| An advance in technology causes | a rightward shift in the supply curve. |
| Tobacco production is one of the more heavily subsidized industries in the United States. Suppose that as a result of intense lobbying from health-related concerns, Congress repeals the tobacco firms' subsidies. what will happen | The tobacco firms' supply curve would shift leftward, since it would now cost more to produce each level of output. |
| At a price above the equilibrium price, there is | a surplus. |
| On a supply-and-demand diagram, equilibrium is found | where the demand and supply curves intersect. |
| On a supply-and-demand diagram, consider a price for which the horizontal distance to the supply curve exceeds the horizontal distance to the demand curve. There is a __________ at that price and the current price must be _____ the equilibrium price. | surplus; above |
| If demand increases by a lesser amount than supply decreases, then equilibrium price __________ and equilibrium quantity __________. | rises; falls |
| Refer to Exhibit 3-1. Equilibrium price and quantity are | $4 and 250 units. |
| Refer to Exhibit 3-3. A movement from point Z to point W would have been the result of | a reduction in the price of good Y. |
| If the supply of and demand for a product both decrease, then equilibrium | quantity must decline, but equilibrium price may either rise, fall, or remain unchanged. |
| Refer to Exhibit 3-4. If this is a competitive market, price and quantity will gravitate toward | $4 and 15 units, respectively. |
| A decrease in the expected price of corn would likely do the following to the current supply and demand for corn: | increase the supply, but decrease the demand. |
| Refer to Exhibit 3-6. If a decrease in income causes the demand for good X to shift from D1 to D2, then good X is | an inferior good. |
| Refer to Exhibit 3-6. If an increase in the price of good Y causes the demand for good X to shift from D1 to D2, goods | substitutes |
| Refer to Exhibit 3-7. If S1 is the relevant supply curve, an increase in the price of good X may cause | a movement along S1 perhaps from point A to point C. |
| Refer to Exhibit 3-8. A price of $5 will result in a ___________________ in this market which will cause the price of the product to gravitate _______________. | surplus; downward. |
| Refer to Exhibit 3-10. $20 is the | all of the above |
| An economic concept that explains why Disney World charges more for the first day of admission than they do for each additional day is the law of | diminishing marginal utility. |
| Which of the following pairs of goods would be most likely to be complements? | DVD's and DVD players. |
| Jerry has $50,000 in his savings account and the average new car price is $23,000. Does Jerry have a demand for a new car? | Not necessarily. Jerry has the ability to buy a new car, but we don't know if he also has the willingness to buy a new car. |
| __________ is the number of units that individuals are __________ to buy at a particular price during some time period. | Quantity demanded; willing and able |
| Which of the following is consistent with the law of demand? | People substitute lower-priced goods for higher-priced goods. |
| Which of the following statements is true? | a and b |
| There are two universities, A and B, in a city. Tuition rises at University A and, as a result, the demand for attending University B rises. It follows that educational services at the two universities are | substitutes. |
| One reads in the newspaper: "Today the president and Congress enacted a law which adds new requirements that child care providers must meet before they can offer their services for sale." As a result, an economist would predict that | the supply of child care services will decrease, thus raising the price of child care services. |
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