Ch. 3 Study Guide

What is the law of demand?

• As the price of a good increases, the quantity demanded decreases.

• As the price of a good increases, the quantity demanded increases.

• As the price of a good decreases, the quantity supplied increases.

• As the price of a good decreases, the quantity demanded remains constant.

Which of the following factors does NOT affect demand?

• Income of consumers

• Price of related goods

• Consumer preferences

• Cost of production

If the price of a substitute good increases, what will happen to the demand for the original good?

• The demand for the original good will increase.

• The demand for the original good will decrease.

• The demand for the original good will remain unchanged,

• It depends on the elasticity of demand for the original good.

What does the law of supply state?

• As the price of a good increases, the quantity supplied decreases.

• As the price of a good decreases, the quantity supplies increases.

• As the price of a good decreases, the quantity supplied remains constant.

• As the price of a good increases, the quantity supplied increases.

Which of the following factors is NOT likely to affect supply?

• Input prices

• Technology

• Consumer preferences

• Government regulations

If the government imposes a per-unit tax on the production of a good, how will it affect the supply curve?

• The supply curve will shift to the right.

• The supply curve will shift to the left.

• The supply curve will be steeper.

• The supply curve will remain unchanged.

Which of the following is an example of a complementary good?

• Peanut butter and jelly

• Apples and oranges

• Coffee and tea

• Chicken and beef

If the government imposes a per-unit subsidy on the production of a good, how will it affect the supply curve?

• The supply curve will shift to the right.

• The supply curve will shift to the left.

• The supply curve will be steeper.

• The supply curve will remain unchanged.

What is a shortage in economics?

• A situation where the quantity demanded exceeds the quantity supplied at a given price.

• A situation where the quantity supplied exceeds the quantity demanded at a given price.

• A situation where the price of a good is at its equilibrium level.

• A situation where there is excess production.

What is a surplus in economics?

• A situation where the quantity demanded exceeds the quantity supplied at a given price.

• A situation where the quantity supplied exceeds the quantity demanded at a given price.

• A situation where the price of a good is at its equilibrium level.

• A situation where there is excess production.