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When a rise in the price of one item results in a decrease in the demand for another good, then the two goods are


A) substitute goods.
B) complementary goods.
C) inferior goods.
D) satisfying the law of supply.

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Which of the following is TRUE of the activities of ticket scalpers?


A) These activities cannot generate profits for the scalpers unless ticket prices are currently below market clearing levels.
B) These activities help reduce the quantities of excess tickets supplied for events in which ticket surpluses currently exist.
C) Engaging in these activities enable scalpers to push the price above the market clearing level.
D) Engaging in these activities enable scalpers to push the price below the market clearing level.

Correct Answer

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-Refer to the above figure. Which of the following statements is TRUE? A) Panel A shows an increase in supply and Panel B shows a decrease in supply. B) Both Panels A and B show an increase in supply. C) Panel A shows a change in quantity supplied and Panel B shows a change in supply. D) Panel A shows a change in supply and Panel B shows a change in quantity supplied. -Refer to the above figure. Which of the following statements is TRUE?


A) Panel A shows an increase in supply and Panel B shows a decrease in supply.
B) Both Panels A and B show an increase in supply.
C) Panel A shows a change in quantity supplied and Panel B shows a change in supply.
D) Panel A shows a change in supply and Panel B shows a change in quantity supplied.

Correct Answer

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If two goods, J and K, are complements, then which of the following statements is FALSE?


A) They are consumed together.
B) An increase in the price of J causes the demand for K to rise.
C) When the quantity demanded of J increases, the demand for K increases.
D) A decrease in the price of K causes an increase in the demand for J.

Correct Answer

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The fact that when the price of a good goes up, people buy less of it is known as the


A) law of supply.
B) law of demand.
C) concept of market equilibrium.
D) need for inferior goods.

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Other things being equal, the relationship between price and quantity supplied is


A) negative.
B) constant.
C) positive.
D) non-existent.

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The price of a commodity in terms of another commodity is


A) the law of demand.
B) a substitute.
C) the money price.
D) the relative price.

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Suppose an individual experiences a permanent increase in income. As a result of this increased income, further assume that the individual eats dinner at restaurants more frequently each month. This information suggests that dinners at restaurants for this individual are


A) an inferior good.
B) a substitute good.
C) a normal good.
D) both complimentary and inferior.

Correct Answer

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An increase in the price of input used to produce a product will lead to


A) a decrease in the demand for that product.
B) a decrease in quantity supplied of that product
C) a decrease in the supply of that product.
D) an increase in the supply of that product.

Correct Answer

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Which of the following is an example of the law of supply?


A) The price of gum has increased so producers are making more gum.
B) The price of labor has increased and producers decrease supply.
C) The amount of a good purchased increases when the price decreases.
D) Producers provide less of a good when the price increases.

Correct Answer

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-Refer to the above figure. Suppose that Cheerios and Apple Jacks are substitutes. Which diagram shows the effect on the demand for Cheerios when the price of Apple Jacks cereal has increased? A) A B) B C) neither graph D) both graphs -Refer to the above figure. Suppose that Cheerios and Apple Jacks are substitutes. Which diagram shows the effect on the demand for Cheerios when the price of Apple Jacks cereal has increased?


A) A
B) B
C) neither graph
D) both graphs

Correct Answer

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Assuming coffee and cola are substitutes, if the price of coffee rises


A) there is a movement along the demand curve for cola.
B) the demand curve for coffee will shift to the right.
C) the demand curve for cola will shift to the right.
D) the demand curve for coffee will shift to the left.

Correct Answer

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Suppose that the price of wheat is above its equilibrium price. You would expect to see


A) a shortage on the market that causes prices to increase further.
B) an increase in quantity demanded because of the high price.
C) a leftward shift of the demand curve because of the high price.
D) sellers begin to lower their prices because of the surplus of wheat.

Correct Answer

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A shortage exists


A) in equilibrium.
B) when quantity supplied is greater than quantity demanded.
C) when quantity supplied is less than quantity demanded.
D) at the market clearing price.

Correct Answer

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A demand schedule provides


A) the quantities of a good people are willing to sell every year.
B) the amount of a good a person wants to sell during a given time period.
C) the alternative quantities demanded for a given time period at different possible prices.
D) the amount of a good a person wants at different times of the day.

Correct Answer

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Market clearing price


A) refers to a movement along the demand curve.
B) refers to a supply curve.
C) exists at a the point at which quantity demanded equals quantity supplied.
D) refers to a surplus.

Correct Answer

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The price of a smartphone increased from $350 to $400 while the price of a smartphone app increased from $1 to $2. The relative price of smartphones in terms of smartphone apps


A) increased from 200 to 350.
B) decreased from 350 to 200.
C) increased from 0.003 to 0.05.
D) decreased from 0.35 to 0.2.

Correct Answer

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The price of a new textbook increased by 25 percent and the price of a used textbook increased by 30 percent. What happened to the relative price of the new textbook?


A) It increased by 5 percent.
B) It increased, but we can't tell by how much without more information.
C) It decreased by 5 percent.
D) It decreased, but we can't tell by how much without more information.

Correct Answer

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What type of relationship does the law of demand demonstrate?


A) direct
B) positive
C) inverse
D) static

Correct Answer

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-Refer to the above figure for the market of Cheerios. Which diagram depicts the effect of an increase in the price of Cheerios? A) A B) B C) neither graph D) both graphs -Refer to the above figure for the market of Cheerios. Which diagram depicts the effect of an increase in the price of Cheerios?


A) A
B) B
C) neither graph
D) both graphs

Correct Answer

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