Question 1

Resources are exchanged in ________ markets.

Correct answer: factor

Question 2
Households are paid income for the resources they supply in an output market.
Correct answer: False

Question 3
According to the law of demand there is negative relationship between ________ and
________.
Correct answer: price; quantity demanded

Question 4
Firms engage in production to
Correct answer: acquire profits.

Question 5
A good whose demand is directly related to income is a(n)
Correct answer: normal good.

Question 6
Suppose the demand for lawnmowers goes down when the price of gasoline goes up.
We can say that these two goods are
Correct answer: complements.

Question 7
When the increase in the price of one good causes the demand for another good to
decrease, the goods are
Correct answer: complements.

Question 8
In response to news reports that drinking a glass of red wine each day can reduce an
individual's risk of heart disease, there will most likely be a(n)
Correct answer: increase in the demand for red wine.

Question 9
The quantity demanded of Coca Cola has increased. The best explanation for this is
that
Correct answer: the price of Coca Cola has decreased.

Question 10
A change in the ________ of a good or service leads to a change in ________ that
leads to a ________.
Correct answer: price; quantity demanded; movement along the demand curve

Question 11
A change in ________ leads to a change in demand that causes a ________.
Correct answer: income or price of other goods; shift in the demand curve

Question 12
According to the law of ________, there is a positive relationship between price and
________.
Correct answer: supply; the quantity supplied

Question 13
The change in the ________ of a good leads to a change in ________, which leads to
a ________.
Correct answer: price; quantity supplied; movement along a supply curve

Question 14
When quantity demanded equals quantity supplied

Correct answer: the market is in equiibrium.

Question 15
When there is an excess demand of a product in an unregulated market, the tendency
is for
Correct answer: price to rise.

Question 16
When there is a surplus of a product in an unregulated market, there is a tendency for
Correct answer: price to fall.

Question 17
Consumers purchase products in ________ markets.
Correct answer: output

Question 18
Wealth is a stock measure.
Correct answer: True

Question 19
A change in the price of a good or service leads to a change in the demand of the
good.
Correct answer: False

Question 20
Quantity demanded is determined by how much consumers are willing to pay for the
good or service.
Correct answer: True

Question 21
If french fries and ketchup are complements, then an increase in the price of french
fries will result in an increase in the demand for ketchup.

Correct answer: False

Question 22
An increase in the wage rate of diamond cutters will increase the supply of cut
diamonds.
Correct answer: False

Question 23
Supply is determined by how much suppliers are willing and able to produce.
Correct answer: False

Question 24
Inferior goods are also known as substitute goods.
Correct answer: False

Question 25
A technological advance in the production of digital video recorders will cause them to
become less expensive.
Correct answer: True

Question 26
If price is below the equilibrium, then quantity supplied will be less than quantity
demanded putting upward pressure on price.
Correct answer: True

Question 27
A simultaneous increase in both the supply of and the demand for vitamin water would
cause an increase in the equilibrium quantity of vitamin water.
Correct answer: True

Question 28

Which of the following will definitely occur when there is a simultaneous increase in
demand and an increase in supply?
Correct answer: an increase in equilibrium quantity

Question 29
Cell phones and blue tooth headsets are complements. An increase in the price of blue
tooth headsets would cause which of the following in the market for cell phones?
Correct answer: The equilibrium price and quantity of cell phones would decrease.

Question 30
Suppose that iPhones are normal goods. If the income of iPhone users decreases, you
predict that in the market for iPhones
Correct answer: both equilibrium price and quantity will fall.