Honors Economics Chapters 3-4 Review Questions

Front 1

Demand is the rate of desired and attainable purchase at each possible price, other things constant.

Back 1

True

Front 2

A demand schedule indicates what an individual desires.

Back 2

False

Front 3

Prices of all other goods are held constant for a given demand schedule.

Back 3

True

Front 4

An increase in the price of one good, other things constant, encourages consumers to switch to other goods.

Back 4

True

Front 5

A price increase results in a decrease in a consumer's real income.

Back 5

True

Front 6

The demand curve for normal goods slopes down, but the demand curve for an inferior good slopes up.

Back 6

False

Front 7

Movements along a demand curve represent changes in quantity demanded.

Back 7

True

Front 8

A change in income causes a change in quantity demanded.

Back 8

False

Front 9

Generally, economists assume that tastes change frequently and are the causes of changes in demand.

Back 9

False

Front 10

An increase in the price of a good provides an incentive to suppliers to switch resources from other goods and use them in producing more of the good with the higher price.

Back 10

True

Front 11

The market supply curve represents the sum of individual supply curves.

Back 11

True

Front 12

An increase in the price of a required resource shifts the supply curve of the good produced with it to the right.

Back 12

False

Front 13

Technological change causes an increase in quantity supplied.

Back 13

False

Front 14

Market reduce the transaction costs of exchange.

Back 14

True

Front 15

If the price is above the equilibrium price, there is an excess quantity supplied.

Back 15

True

Front 16

An increase in demand lowers the equilibrium price.

Back 16

False

Front 17

An increase in the price of a required resource will cause a change in supply of the good produced with it.

Back 17

True

Front 18

Disequilibrium can never exist if the markets are allowed to operate without government intervention.

Back 18

False

Front 19

A price ceiling often lead to an excess quantity demanded.

Back 19

True

Front 20

Demand reflects the quantity the consumers

Back 20

are willing and able to buy at alternative prices

Front 21

Which of the following is not held constant in defining the demand schedule?

Back 21

price of the good in question

Front 22

The substitution effect of a change in the price of good X is to

Back 22

encourage consumers to substitute more of good X for other goods if X's price falls

Front 23

A price change

Back 23

affects the consumer's ability to buy the good and the consumer's willingness to buy the good

Front 24

The income effect of a price change will be greatest for which of the following goods?

Back 24

House

Front 25

A movement along a demand curve can be caused by a change in

Back 25

the price of the good in question

Front 26

A change in quantity demanded is caused by a change in

Back 26

price

Front 27

Which of the following will cause an increase in the demand for an inferior good?

Back 27

an increase in the number of consumers

Front 28

Supply indicates the quantity that producers

Back 28

are willing to offer for sale at a given price

Front 29

Price and quantity supplied are usually directly related because

Back 29

higher prices mean that producers are rewarded more for production and the law of increasing opportunity cost applies

Front 30

Which of the following does not change supply?

Back 30

a change in price of the good in question

Front 31

A movement along a supply curve is caused by

Back 31

a change in the number of consumers

Front 32

If the price of an alternative good falls, but the price of good X remains the same,

Back 32

supply of good X will increase

Front 33

The larger the market,

Back 33

the greater the degree of specialization

Front 34

An excess quantity demanded tends to

Back 34

put upward pressure on price

Front 35

A shift in the supply curve with demand held constant will

Back 35

cause equilibrium quantity to change in the same direction and the equilibrium price to change in the opposite direction

Front 36

Price ceilings tend to produce

Back 36

shortage

Front 37

A shortage exists when, for a given price, quantity demanded exceeds

Back 37

quantity supplied

Front 38

Government-imposed price floors tend to produce a

Back 38

surplus

Front 39

If the quantity demanded equals quantity supplied at a specific price, the market is in

Back 39

equilibrium

Front 40

A change in technology causes a change in

Back 40

supply

Front 41

alternative goods

Back 41

are goods that are produced using the same resources

Front 42

an increase in price causes a(n)

Back 42

increase in quantity supplied

Front 43

supply is a relationship between price and

Back 43

quantity supplied during a given time period, other things constant

Front 44

Bread is a

Back 44

normal good if demand for it increases when income increases

Front 45

Two goods are

Back 45

substitutes if an increase in the price of one causes the demand for the other to increase

Front 46

demand schedule

Back 46

a change in the price of the good leads to a change in quantity demanded; a change in a relevant factor other than the price of the good leads to a change in demand

Front 47

demand is a relation indicating the quantity of a commodity that consumers are _________ and ___________ to purchase at various prices during a given time period, others things constant

Back 47

willing; able

Front 48

a price increase has two effects, the ________ effect means that a consumer switches to a relatively less expensive good; the __________ effect means that the consumer's purchasing power changes

Back 48

substitution; income