3. MICRO-CH-4

A perfectly competitive market has

• only one seller.

• at least a few sellers.

• many buyers and sellers.

• firms that set their own prices.

• None of the answers is correct.

If an increase in the price of blue jeans leads to an increase in the demand for tennis shoes, then blue jeans and tennis shoes are

• substitutes

• complements

• normal goods

• inferior goods

• None of the answers is correct.

The law of demand states that an increase in the price of a good

• decreases the demand for that good.

• decreases the quantity demanded for that good.

• increases the supply of that good.

• increases the quantity supplied of that good.

• None of the answers is correct.

The law of supply states that an increase in the price of a good

• decreases the demand for that good.

• decreases the quantity demanded for that good.

• increases the supply of that good.

• increases the quantity supplied of that good.

• None of the answers is correct.

If an increase in consumer incomes leads to a decrease in the demand for camping equipment, then camping equipment is

• a complementary good

• a substitute good

• a normal good

• an inferior good

• None of the answers is correct.

A monopolistic market has

• only one seller.

• at least a few sellers.

• many buyers and sellers.

• firms that are price takers.

• None of the answers is correct.

Which of the following shifts the demand for watches to the right?

• a decrease in the price of watches

• a decrease in consumer incomes if watches are a normal good

• a decrease in the price of watch batteries if watch batteries and watches are complements

• an increase in the price of watches

• None of the answers is correct.

All of the following shift the supply of watches to the right except

• an increase in the price of watches.

• an advance in the technology used to manufacture watches.

• a decrease in the wage of workers employed to manufacture watches.

• manufacturers' expectations of lower watch prices in the future.

• All of the above cause an increase in the supply of watches.

If the price of a good is above the equilibrium price,

• there is a surplus, and the price will rise

• there is a surplus, and the price will fall

• there is a shortage, and the price will rise

• there is a shortage, and the price will fall

• the quantity demanded is equal to the quantity supplied, and the price remains unchanged

If the price of a good is below the equilibrium price,

• there is a surplus, and the price will rise

• there is a surplus, and the price will fall

• there is a shortage, and the price will rise

• there is a shortage, and the price will fall

• the quantity demanded is equal to the quantity supplied, and the price remains unchanged