Test Questions on Study Guide Questions And – Flashcards
Flashcard maker : Jacob Patel
The demand for a product is the amount that
buyers are willing and able to purchase at alternative prices
A demand curve shows how quantity demanded changes as the price changes. It implies that
everything else that affects demand is assumed to be constant
The law of demand says that the lower the price of a good, other things constant,
the larger the quantity demanded of that good
The law of demand states that
price and quantity demanded are inversely related
The law of demand assumes that as the price of a good increases,
consumers tend to shift their purchases to relatively cheaper substitutes
The law of demand says that as the price of a good rises,
buyers purchase less, in part because their real income has fallen
Movements along a demand curve are called changes in
quantity demanded
Which of the following statements about the substitution effect of a price change is true?
It is caused by a change in relative prices.
Suppose you drink more tea because the price of coffee has increased. Which of the following best explains your action?
the substitution effect
A demand curve usually has a
negative slope because price and quantity demanded are inversely related
Which of the following statements about demand is true?
The demand curve for bacon will not shift when the price of bacon changes.
The demand curve for spinach shows the quantity demanded of spinach
at each possible price of spinach
Studies show that the demand curve for peas has shifted. Which of the following explanations would you reject first?
The price of peas has changed.
The effect of a decrease in the price of personal computers, other things constant, is likely to be best represented by which of the following?
a movement rightward along the demand curve
Which of the following is not true regarding a change in quantity demanded?
The demand curve shifts whenever the quantity demanded changes.
There are three consumers in the market for playing cards: Don, John, and Ron. At a price of $2 per pack, the quantities demanded by each are 3, 2, and 1, respectively. At a price of $1.50 per pack, the quantities demanded by each are 4, 5, and 3, respectively. Which of the following is true?
The price decrease causes the quantity demanded in this market to increase by 6.
Which of the following will not shift the demand curve for movie tickets?
a change in the price of movie tickets
A rightward shift of a demand curve represents a decrease in demand.
False
The slope of the demand curve for a normal good must be positive.
False
If income rises and a good is inferior, then demand for that good will decrease.
True
A decrease in the price of a good will cause a leftward shift of the demand curve, if it is a normal good
False
If we say that demand has increased, we mean that there has been
a rightward shift of the demand curve
A decrease in demand for a good could mean that
the demand curve has shifted to the left
If demand for personal computers increases as a result of an increase in income,
personal computers must be a normal good
If the price of a haircut (a normal good) increases, other things constant, the
quantity demanded of haircuts decreases
If the price of gasoline (a normal good) decreases, other things constant,
the quantity demanded of gasoline increases
The difference between normal and inferior goods is that
an increase in income will shift the demand curve for a normal good rightward and the demand curve for an inferior good leftward
In the case of a normal good, an increase in consumers’ incomes would shift the
demand curve outward
If a decrease in the price of good A causes an increase in the demand for good B, then A and B must be complements.
True
Which of the following is the best example of substitutes?
hiking boots and athletic shoes
Which of the following might cause the demand for ice cream, a normal good, to increase?
Which of the following will cause the demand curve for gasoline to shift leftward?
an increase in the price of gasoline
Two goods are considered substitutes only if a(n)
increase in the price of one leads to an increase in the demand for the other
Suppose there are only two goods, apples and oranges. What happens if the price of each good increases by 15 percent?
There is no substitution effect because relative prices have remained constant.
For a renter, the income effect of an increase in apartment rents will
have a greater effect than the income effect of an increase in the price of chewing gum
Which of the following would most likely increase the supply of college textbooks?
technology of book production improves
An improvement in technology would shift
the supply curve rightward
A decrease in the price of peanuts will cause a leftward shift of the supply curve of peanut butter.
True
If the price of labor increases, employers will hire more labor because it is more valuable
False
Which of the following causes the supply of leather jackets to decrease?
an increase in the price of leather
Which of the following will increase the supply of vanilla ice cream?
a decrease in the price of milk (an ingredient in ice cream)
Which of the following would shift the supply curve for a good to the left?
an increase in the cost of an important resource used to make that good
An increase in the price of a good normally increases the
demand for its substitutes
Assume that corn and soybeans are alternatives that could be grown by most farmers. An increase in the price of corn will
decrease the supply of soybeans
An increase in the number of producers of a good will
increase the market supply because market supply is the sum of all individual supply curves
Which of the following will not shift the market supply curve for corn?
a change in the price of corn
Studies show that the supply curve for oranges has shifted. Which of the following could not explain the shift of the supply curve?
Which of the following is not likely to cause a change in the supply of wheat?
a government subsidy to farmers who do not grow wheat
When quantity demanded of a good is less than the quantity supplied at the prevailing market price,
the price of the good tends to fall
If the price of the good described in Exhibit 4-1 is $1.20, then there is a
shortage of 60 units
If the price of the good described in Exhibit 4-1 is $1.60, then there is a
surplus of 30
If the price of the good described in Exhibit 4-1 is $1.50, then
the market is in equilibrium
When a market is in equilibrium,
there is no incentive for consumers or producers to change their current behavior
An increase in demand will cause a(n)
increase in quantity supplied
A decrease in demand will cause a(n)
decrease in equilibrium price
A decrease in demand will result in a(n)
decrease in equilibrium price and an increase in equilibrium quantity
An increase in demand for chocolate chips would usually result in a(n)
higher equilibrium price and a higher equilibrium quantity
Suppose that the price of compact disks (CDs) increases, other things equal. Which of the following in the most likely effect in the market for DVDs?
an increase in demand for DVDs
Velcro is becoming more and more popular for a variety of uses, including as fasteners for shoes. What should happen to the equilibrium price and quantity for shoelaces as a result?
Both price and quantity should decrease.
Which of the following would cause both the equilibrium price and equilibrium quantity of cookies to decrease?
a rise in the price of milk (a complement)
