Econ101 Chapter 3 TB PDF

Survey of Economics, 5e (O'Sullivan et al.) Chapter 3 Demand, Supply, and Market Equilibrium 3.1 The Demand Curve 1) If a competitive market operates perfectly, it relies on A) the number of people buying goods. B) the laws of supply and demand. C) how many products can be produced for sale. D) how...

Survey of Economics, 5e (O'Sullivan et al.) Chapter 3 Demand, Supply, and Market Equilibrium 3.1 The Demand Curve 1) If a competitive market operates perfectly, it relies on A) the number of people buying goods. B) the laws of supply and demand. C) how many products can be produced for sale. D) how much people are willing to pay for the products. Answer: B Diff: 1 Topic: Demand, Supply and Market Equilibrium Skill: Conceptual AACSB: Reflective Thinking 2) A change in the quantity demanded of a product is the result of a change in A) the price of the product. B) the price of related goods. C) consumer income. D) the cost of producing the product. Answer: A Diff: 1 Topic: The Demand Curve Skill: Conceptual AACSB: Reflective Thinking 3) A demand curve is defined as the relationship between A) the price of a good and the quantity of that good that consumers are willing to buy. B) the price of a good and the quantity of that good that producers are willing to sell. C) the income of consumers and the quantity of a good that consumers are willing to buy. D) the income of consumers and the quantity of a good that producers are willing to sell. Answer: A Diff: 1 Topic: The Demand Curve Skill: Definition 4) The quantity demanded of a product increases as A) consumer income rises. B) the prices of other products fall. C) the price of the product rises. D) the price of the product falls. Answer: D Diff: 1 Topic: The Demand Curve Skill: Definition 5) The Law of Demand can be explained as A) a lot of people wanting the same thing. B) the higher the price, the smaller the quantity demanded, ceteris paribus. C) people are willing to make limited sacrifices to acquire products. D) legal reasons people make purchases in the marketplace. Answer: B Diff: 2 Topic: The Individual Demand Curve and the Law of Demand Skill: Conceptual AACSB: Reflective Thinking 6) In considering the relationships between price and quantity demanded, "ceteris paribus" directs the economist to assume that A) price increases affect quantity. B) quantity increases affect prices. C) neither price nor quantity affect demand. D) all other variables remain unchanged. Answer: D Diff: 2 Topic: The Individual Demand Curve and the Law of Demand Skill: Conceptual AACSB: Reflective Thinking 7) When there is a change in the quantity demanded it means that A) the hours the customer can buy products each day have increased. B) the number of products in inventory have increased. C) the quantity a consumer is willing to buy changes when the price changes. D) the selling price of the products has not changed. Answer: C Diff: 2 Topic: The Individual Demand Curve and the Law of Demand Skill: Conceptual AACSB: Reflective Thinking 8) The market demand curve A) shows the relationship between the price of a good and the quantity that all consumers together are willing to buy. B) is drawn assuming that variables such as income and tastes are variable. C) is drawn assuming that the number of consumers is variable. D) is drawn assuming that the selling price is fixed. Answer: A Diff: 1 Topic: From Individual Demand to Market Demand Skill: Definition 9) Suppose that there are only three consumers of a product. At a price of $6 per unit, the first consumer would buy 12 units of the product, the second consumer would buy 8 units, and the third consumer would buy 3 units of the product. If you drew a market demand curve for this product, the quantity demanded at a price of $6 would be A) 23 units. B) 20 units. C) 12 units. D) 11 units. Answer: A Diff: 1 Topic: From Individual Demand to Market Demand Skill: Analytical AACSB: Analytic Skills Figure 3.1 10) Refer to Figure 3.1, which shows Molly's and Ryan's individual demand curves for compact discs per month. Assuming Molly and Ryan are the only consumers in the market, what is the market quantity demanded at a price of $3? A) 6 B) 9 C) 15 D) 20 Answer: D Diff: 1 Topic: From Individual Demand to Market Demand, graphing Skill: Analytical AACSB: Analytic Skills 11) Refer to Figure 3.1, which shows Molly's and Ryan's individual demand curves for compact discs per month. Assuming Molly and Ryan are the only consumers in the market, what is the market quantity demanded at a price of $9? A) 2 B) 4 C) 6 D) 10 Answer: D Diff: 1 Topic: From Individual Demand to Market Demand, graphing Skill: Analytical AACSB: Analytic Skills 12) Refer to Figure 3.1, which shows Molly's and Ryan's individual demand curves for compact discs per month. Assuming Molly and Ryan are the only consumers in the market, if the market quantity demanded is 15, the price must be A) $0. B) $6. C) $9. D) $15. Answer: B Diff: 1 Topic: From Individual Demand to Market Demand, graphing Skill: Analytical AACSB: Analytic Skills 13) Refer to Figure 3.1, which shows Molly's and Ryan's individual demand curves for compact discs per month. Assuming Molly and Ryan are the only consumers in the market, if the market quantity demanded is 5, the price must be A) $3. B) $6. C) $9. D) $12. Answer: D Diff: 1 Topic: From Individual Demand to Market Demand, graphing Skill: Analytical AACSB: Analytic Skills 14) As the price of a product falls, the demand for the product increases, ceteris paribus. Answer: FALSE Diff: 1 Topic: The Demand Curve Skill: Conceptual AACSB: Reflective Thinking 15) On the "demand side" of a market, consumers indicate what they are willing to buy, in what quantity and at what price. Answer: TRUE Diff: 1 Topic: The Demand Curve Skill: Definition 16) The law of demand states that there is a negative relationship between price and quantity demanded, ceteris paribus. Answer: TRUE Diff: 1 Topic: The Individual Demand Curve and the Law of Demand Skill: Definition 17) The market demand curve shows the relationship between the price and the quantity demanded by all consumers, everything else being equal. Answer: TRUE Diff: 2 Topic: From Individual Demand to Market Demand Skill: Definition 3.2 The Supply Curve 1) A supply curve is defined as the relationship between A) the price of a good and the quantity that consumers are willing to buy. B) the price of a good and the quantity that producers are willing to sell. C) the income of consumers and the quantity of a product that consumers are willing to buy. D) the income of consumers and the quantity of a product that producers are willing to sell. Answer: B Diff: 1 Topic: The Supply Curve Skill: Definition 2) A change in quantity supplied of a product is the result of a change in A) consumer income. B) the state of production technology. C) the cost of producing the product. D) the price of the product. Answer: D Diff: 1 Topic: The Supply Curve Skill: Conceptual AACSB: Reflective Thinking 3) The Law of Supply states that A) producers should only produce what they can sell. B) producers should only sell the items when the price is right. C) there is a positive relationship between price and quantity supplied, ceteris paribus. D) producers are legally required to make necessary items available in the marketplace. Answer: C Diff: 1 Topic: The Individual Supply Curve and the Law of Supply Skill: Conceptual AACSB: Reflective Thinking Quantity of Frozen Latte-On-A-Stick Supplied Price Flo's SupplyRita's Supply 1 0 0 2 0 3 3 4 6 4 9 9 5 15 12 Table 3.1 4) Refer to Table 3.1, which shows Flo's and Rita's individual supply schedules for frozen latteon-a-stick. Assuming Flo and Rita are the only suppliers in the market, what is the market quantity supplied at a price of $2? A) 0 B) 2 C) 3