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BSA 2-24D
1. A market:
a. Reflects upsloping demand and downsloping supply curves
b. Entails the exchange of goods, but not services.
c. Is an institution that brings together buyers and sellers.
d. Always requires face-to-face contact between buyer and seller.
4. In presenting the idea of a demand curve economists presume that the most
important variable in determining the quantity demanded is:
a. The price of the product itself.
b. Consumer income.
c. The prices of related goods.
d. Consumer tastes.
6. When the price of a product rises, consumers shift their purchases to other products
whose prices are now relatively lower. This statement describes:
a. An inferior good.
b. The rationing function of prices.
c. The substitution effect.
d. The income effect.
7. In the past few years, the demand for donuts has greatly increased. This increase in
demand might best be explained by:
a. An increase in consumer income.
b. An increase in the price of a substitute good.
c. A change in consumer expectations.
d. A change in buyer tastes.
9. If consumers are willing to pay a higher price than previously for each level of output,
we can say that the following has occurred:
a. A decrease in demand.
b. An increase in demand.
c. A decrease in supply.
d. An increase in supply.
10. If producers must obtain higher prices that previously to produce various levels of
output, the following has occurred:
a. A decrease in demand.
b. An increase in demand.
c. A decrease in supply.
d. An increase in supply.
13. When the price of oil declines significantly, the price of gasoline also declines. The
latter occurs because of a(n):
a. Increase in the demand for gasoline.
b. Decrease in the demand for gasoline.
c. Increase in the supply of gasoline.
d. Decrease in the supply of gasoline.
14. An increase in the excise tax on cigarettes raises the price of cigarettes by shifting
the:
a. Demand curve for cigarettes rightward.
b. Demand curve for cigarettes leftward.
c. Supply curve for cigarettes rightward.
d. Supply curve for cigarettes leftward.
15. A government subsidy to the producers of a product:
a. Reduces product supply.
b. Increases product supply.
c. Reduces product demand.
d. Increases product demand.
True/False Questions
1. A(n) market is the process of buyers and sellers exchange goods and services.
2. Buyers, as a group, determine the demand side of the market. Sellers, as a group,
determine the supply side of the market.
3. An increase in demand is represented by a rightward shift in the demand curve; a
decrease in demand is represented by a leftward shift in the demand curve.
4. The market supply curve is a graphical representation of the amount of goods and
services that suppliers are _________ and __________ to supply at various prices.
5. The supply of good increases if the price of one of its substitutes in production falls.
The supply of a good decrease if the price of one of its substitutes in production rises.
TECHNOPRENEUR EXERCISE (5 POINTS)
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