Chapter 2 PE

Currently you purchase ten frozen pizzas per month. You will graduate from college in December, and you will start a new job in January. You have no plans to purchase frozen pizzas in January. For you, frozen pizzas are:

• a substitute good.

• a normal good.

• an inferior good.

• a complementary good.

A decrease in the price of a good will

• increase supply.

• decrease supply.

• increase quantity supplied.

• decrease quantity supplied.

Pizza is a normal good if the demand

• for pizza rises when income rises.

• for pizza rises when the price of pizza falls.

• curve for pizza slopes upward.

• curve for pizza shifts to the right when the price of burritos rises, assuming pizza and burritos are substitutes.

The line that relates the price of a good and the quantity demanded of that good is called the demand

• schedule, and it usually slopes upward.

• schedule, and it usually slopes downward.

• curve, and it usually slopes upward.

• curve, and it usually slopes downward.

You lose your job and, as a result, you buy fewer iTunes music downloads. This shows that you consider iTunes music downloads to be:

• a substitute good.

• an inferior good.

• a normal good.

• a complementary good.

A competitive market is one in which there

• is only one seller, but there are many buyers.

• are many sellers, and each seller has the ability to set the price of his product.

• are many sellers, and they compete with one another in such a way that some sellers are always being forced out of the market.

• are so many buyers and so many sellers that each has a negligible impact on the price of the product.

When we move along a given demand curve,

• only price is held constant.

• income and price are held constant.

• all nonprice determinants of demand are held constant.

• all determinants of quantity demanded are held constant.

Ken and Traci are two woodworkers who both make tables and chairs. In one month, Ken can make 3 tables or 18 chairs, whereas Traci can make 8 tables or 24 chairs. Given this, we know that

• A. Ken has an absolute advantage in chairs.

• B. Traci has an absolute advantage in chairs.

• C. Ken has a comparative advantage in tables.

• D. Traci has a comparative advantage in chairs.

Refer to Figure 1. What is the equilibrium quantity in this market?

• 10 units

• 7.5 units

• 5 units

• 2.5 units

Which of the following statements is correct?

• Buyers determine demand, and sellers determine supply.

• Buyers determine supply, and sellers determine demand.

• Buyers determine both demand and supply.

• Sellers determine both demand and supply.