Chapter 4,5,6,7 Review

A measure of how consumers react to a change in price is known as what?

• Elasticity of demand

• Law of demand

• Income effect

• Demand curve

What factor would NOT cause the demand curve to change?

• Consumer tastes and advertising

• Price

• Income

• Population

Which of the following describes the substitution effect?

• As the price of a good falls, people will substitute other products.

• As the price of a good rises, people will substitute other products.

• As demand falls, people will substitute with other products.

• As demand rises, people will substitute other products.

Which of the following is an example of an inferior good?

• Laptop computer

• New car

• Generic cereal

• Lobster

Which of the following is NOT an example of complements?

• Calculator and cellphone

• Electric shaver and charging cord.

• Skis and Ski boots.

• Rowboat and oars

According to the law of supply,

• The higher the price, the greater the quantity produced.

• The lower the price, the greater the quantity produced.

• If the price of a good falls, new firms may enter the market.

• If the price of a good rises, some firms will produce less.

Advances in technology usually,

• Increase costs and increase supply at lower price levels

• Increase cost and decrease supply at all price levels.

• Lower costs and increasing supply at higher price levels.

• Lower costs and increase supply at all price levels

Which of the following is an example of a variable cost?

• Rent

• Raw Materials

• Machinery repairs

• Equipment

If sellers expect the price of a good to rise in the future, they are likely to what?

• Put more goods on the market immediately

• Set prices according to the law of demand.

• Store goods now and sell more in the future

• Raise their prices now.

The supply curve

• Is always a horizontal line

• Always rises from left to right.

• Always rises from right to left.

• Is always a vertical line.