CH 2.1 : Relationships between Markets
32 Questions
0 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is the primary role of understanding relationships between markets?

  • To ignore the dynamics of factor markets
  • To determine the price of a single good
  • To analyze how changes in one market affect others (correct)
  • To predict the behavior of a single consumer

    • What do relative prices represent?

  • The total revenue of a firm
  • The cost of one good or service in terms of another (correct)
  • The absolute cost of a good or service
  • The quantity of a good or service demanded

    • What happens to demand when the price of a good increases, assuming it is not inelastic?

  • Demand increases
  • Demand remains the same
  • Demand decreases (correct)
  • Demand becomes inelastic

    • What is the effect of an increase in the price of a complement good?

    <p>Demand for the related good decreases</p> Signup and view all the answers

    What is a key factor influencing demand?

    <p>Consumer preferences</p> Signup and view all the answers

    What happens to supply when the price of a good increases?

    <p>Supply increases</p> Signup and view all the answers

    What is the effect of an increase in the price of a substitute good?

    <p>Demand for the original good increases</p> Signup and view all the answers

    Why are relative prices dynamic?

    <p>Because they are influenced by various economic factors</p> Signup and view all the answers

    Which of the following is a consequence of a change in one market affecting others?

    <p>Influences on prices, supply, and demand across the economy</p> Signup and view all the answers

    What is the primary factor that influences how resources are distributed in an economy?

    <p>Dynamic relative prices</p> Signup and view all the answers

    What is the result of a decrease in the price of a good that is a substitute for another good?

    <p>An increase in demand for the other good</p> Signup and view all the answers

    What is the impact of an increase in the price of a good on its supply, assuming it is not a Giffen good?

    <p>An increase in supply</p> Signup and view all the answers

    Which of the following is a factor that influences consumer demand?

    <p>Price expectations</p> Signup and view all the answers

    What is the effect of a decrease in the price of a good on its demand, assuming it is an elastic good?

    <p>An increase in demand</p> Signup and view all the answers

    What is the result of an increase in the price of a good that is a complement to another good?

    <p>A decrease in demand for the other good</p> Signup and view all the answers

    What is the relationship between the price of a good and its demand, assuming it is not a Giffen good?

    <p>Inverse relationship</p> Signup and view all the answers

    In which market structure would a shift in relative prices have the most significant impact on resource allocation?

    <p>Perfect Competition</p> Signup and view all the answers

    What is the likely outcome if there is an increase in the price of a substitute good, ceteris paribus?

    <p>A decrease in the demand for the original good</p> Signup and view all the answers

    In which of the following scenarios would the law of supply not hold?

    <p>When the government imposes a quota on production</p> Signup and view all the answers

    What would be the likely consequence if there is a decrease in the price of a complement good?

    <p>An increase in the demand for the original good</p> Signup and view all the answers

    If the law of demand holds, what would be the likely outcome if there is an increase in consumer income, ceteris paribus?

    <p>An increase in the demand for normal goods</p> Signup and view all the answers

    What would be the likely outcome if there is an increase in the price of a good, assuming it is a normal good?

    <p>A decrease in the demand for the good</p> Signup and view all the answers

    What is the likely outcome if there is a change in the price of a good in one market, assuming all other markets are interconnected?

    <p>A change in the prices of other goods in other markets</p> Signup and view all the answers

    What is the primary reason why relative prices are dynamic?

    <p>Because of changes in supply and demand</p> Signup and view all the answers

    How do changes in one market affect others in an economy?

    <p>By altering the relative prices of goods and services</p> Signup and view all the answers

    What is the primary factor that influences the supply of a good?

    <p>The price of the good itself</p> Signup and view all the answers

    How do changes in the price of a good affect its demand, assuming the good is not a Giffen good?

    <p>The demand decreases if the price increases, but increases if the price decreases</p> Signup and view all the answers

    What is the effect of an increase in the price of a good on its demand, if the good is inelastic?

    <p>The demand remains unaffected</p> Signup and view all the answers

    What is the relationship between the price of a good and its demand, assuming the good is a normal good?

    <p>The demand decreases when the price increases</p> Signup and view all the answers

    What is the primary consequence of a shift in relative prices in an economy?

    <p>A redistribution of resources in the economy</p> Signup and view all the answers

    How do changes in the price of a complement good affect its demand?

    <p>The demand increases when the price of the complement good decreases</p> Signup and view all the answers

    What is the primary role of relative prices in an economy?

    <p>To allocate resources in the economy</p> Signup and view all the answers

    More Like This

    Use Quizgecko on...
    Browser
    Open
    Browser
    Browser