ECON 101

Economics is the study of

• A) how to invest in the stock market.

• B) how society uses limited resources.

• C) the role of money in markets.

• D) how government officials decide which goods and services are produced.

An arrangement that allows buyers and sellers to exchange things is called

• A) a contract.

• B) a market.

• C) money.

• D) efficient.

Because resources are limited,

• A) only the very wealthy can get everything they want.

• B) firms will be forced out of business.

• C) the availability of goods will be limited but the availability of services will not.

• D) people must make choices.

A change in the quantity demanded of a product is the result of a change in

• A) the price of the product.

• B) the price of related goods.

• C) consumer income.

• D) the cost of producing the product.

The quantity demanded of a product increases as

• A) consumer income rises.

• B) the prices of other products fall.

• C) the price of the product rises.

• D) the price of the product falls.

A good for which demand decreases when income increases is known as a(n) ________ good.

• A) normal

• B) inferior

• C) complementary

• D) substitute

People will buy more of a normal good when their income decreases.

• TRUE

• FALSE

The price elasticity of demand reflects the responsiveness of

• A) firms to changes in demand.

• B) demand to a change in price of a substitute good.

• C) demand to a change in price.

• D) quantity demanded to a change in price.

The price of apples increases from $1 to $1.10. At the same time, the quantity of apples demanded decreases from 100 to 90. The price elasticity of demand for apples is

• A) 0.02.

• B) 0.9.

• C) 1.

• D) 1.1.

If the quantity demanded of restaurant meals increases by 20% when income increases by 10%, the demand for restaurant meals is

• A) income-inelastic.

• B) income-elastic.