ECO202A3

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

Graphically, the market demand curve is: steeper than any individual demand curve that is part of it. greater than the sum of the individual demand curves. the horizontal sum of individual demand curves. the vertical sum of individual demand curves.

A demand curve shows the relationship between: money income and quantity demanded. price and production costs. price and quantity demanded. consumer tastes and quantity demanded.

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

When the price of a product increases, a consumer is able to buy less of it with a given money income. This describes the: cost effect. inflationary effect. income effect. substitution effect.

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

Steve went to his favorite hamburger restaurant with $3, expecting to buy a $2 hamburger and a $1 soda. When he arrived he discovered that hamburgers were on sale for $1, so Steve bought two hamburgers and a soda. Steve's response to the decrease in the price of hamburgers is best explained by: the substitution effect. the income effect. the price effect. a rightward shift in the demand curve for hamburgers.

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

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

Which of the following is most likely to be an inferior good? fur coats ocean cruises used clothing steak

Which of the following will cause the demand curve for product A to shift to the left? population growth that causes an expansion in the number of persons consuming A. an increase in money income if A is a normal good. a decrease in the price of complementary product C. an increase in money income if A is an inferior good.

Other things equal, which of the following might shift the demand curve for gasoline to the left? the discovery of vast new oil reserves in Montana the development of a low-cost electric automobile an increase in the price of train and air transportation a large decline in the price of automobiles

Digital cameras and memory cards are: substitute goods. complementary goods. independent goods. inferior goods.

Refer to the above diagram. A decrease in supply is depicted by a: move from point x to point y. shift from S1 to S2. shift from S2 to S1. move from point y to point x.

The supply curve shows the relationship between: price and quantity supplied. production costs and the amount demanded. total business revenues and quantity supplied. physical inputs of resources and the resulting units of output.

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

Refer to the above table. If demand is represented by columns (3) and (2) and supply is represented by columns (3) and (5), equilibrium price and quantity will be: $10 and 60 units. $9 and 50 units. $8 and 60 units. $7 and 50 units.

Refer to the above diagram. If this is a competitive market, price and quantity will move toward: $60 and 100, respectively. $60 and 200, respectively. $40 and 150, respectively. $20 and 150, respectively.

A product market is in equilibrium: when there is no surplus of the product. when there is no shortage of the product. when consumers want to buy more of the product than producers offer for sale. where the demand and supply curves intersect.

Allocative efficiency refers to: the use of the least-cost method of production. the production of the product mix most wanted by society. the full employment of all available resources. production at some point inside of the production possibilities curve.