Micro Econs_ Chap 3

Demands differ from wants because

• demands are unlimited, whereas wants are limited by income.

• demands reflect a decision about which wants to satisfy and a plan to buy the good, while wants are unlimited and involve no specific plan to acquire the good

• wants imply a decision about which demands to satisfy, while demands involve no specific plan to acquire the good.

• None is correct

The "law of demand" states that changes in ...

• demand are related directly to changes in supply.

• the quantity demanded of a good are not related to changes in the quantity supplied.

• the quantity demanded of a good are inversely related to changes in its price.

• demand are inversely related to changes in supply.

The price of cereal rises. As a result, people have cereal for breakfast on fewer days and eat eggs instead. This behavior is an example of ...

• a decrease in the quantity demanded of cereal because of the substitution effect.

• an increase in the quantity demanded of eggs because of the income effect.

• a decrease in the quantity supplied of cereal because of the substitution effect.

• an increase in the quantity supplied of eggs because of the income effect.

Which of the following influences people's buying plans and does not shift the demand curve?

• the prices of related goods

• the price of the good

• income

• preferences

Which of the following pairs of goods are most likely substitutes?

• DVDs and DVD players

• lettuce and salad dressing

• cola and lemon lime soda

• peanut butter and gasoline

Oatmeal is a normal good and cold cereal is a substitute for oatmeal. Raisins are a complement for oatmeal. Which of the following increases the demand for oatmeal?

• an increase in the price of raisins

• a decrease in income

• a decrease in population

• an increase in the price of cold cereal

If the price of chicken falls, then in the market for beef

• the demand curve for beef shifts rightward.

• there is a movement downward along the demand curve for beef.

• there is a movement upward along the demand curve for beef.

• the demand curve for beef shifts leftward.

Which of the following influences does NOT shift the supply curve?

• a rise in the wages paid workers who produce the good

• the development of new technology

• people deciding that they want to buy more of the product

• a decrease in the number of suppliers

The price of jet fuel falls. This fall shifts the ...

• demand curve for airplane trips rightward.

• demand curve for airplane trips leftward.

• supply curve of airplane trips leftward.

• supply curve of airplane trips rightward.

Which of the following is the best way to describe equilibrium in a market? At equilibrium, the ...

• price is the lowest possible.

• price is usually affordable to most people.

• supply and demand curves can never shift again.

• quantity supplied equals the quantity demanded.