MicroEcon Chapters 3,4,5

Which statement is consistent with the law of demand?

• An increase in market price will lead to an increase in quantity demanded.

• A reduction in market price will lead to an increase in quantity demanded.

• • A reduction in market price will lead to a decrease in quantity demanded.

• 1. • At a zero price, quantity demanded will be equal to zero.

Which of the following characteristics lead to a downward-sloping demand curve?

• A decline in the price of a related good

• Increasing marginal benefit

• Diminishing marginal utility

• Increase opportunity costs

• An increase in purchasing power as market price decreases.

How is a market demand curve derived from individual demand curves?

• Use the largest quantity demanded among all consumers for each price.

• Calculate the average quantity demanded among all consumers.

• Add up quantities demanded by all individual consumers for each price.

• Add up prices paid for each unit demanded by individuals

What are the determinants of demand?

• Income

• a good's own price/resource price

• technology

• taste and preferences

• number of consumers

Which statement is consistent with the law of supply?

• At a zero price, quantity supplied will be infinite.

• An increase in market price will lead to an increase in quantity supplied. Correct

• • An increase in market price will lead to a decrease in quantity supplied.

• A decrease in market price will lead to an increase in quantity supplied.

How is the market supply curve derived from the supply curves of individual producers?

• By using the largest quantity supplied among all producers for each price

• • By adding up the prices paid for each unit supplied by producers

• By calculating the average quantity supplied among all producers

• By adding up the quantities supplied by all individual producers for each price

What are the determinants of supply?

• Income

• Prices of other goods/Resources prices

• Technology

• Tastes and preferences

• Number of producers

A market

• is an institution that brings together buyers and sellers.

• entails the exchange of goods, but not services.

• • reflects upsloping demand and downward sloping supply curves.

• always requires face-to-face contact between buyer and seller.

Markets, viewed from the perspective of the supply and demand model,

• assume market power so that buyers and sellers bargain with one another.

• assume many buyers and many sellers of a standardized product.

• do not exist in the real-world economy.

• are approximated by markets in which a single seller determines price.

Graphically, the market demand curve is

• steeper than any individual demand curve that is part of it.

• greater than the sum of the individual demand curves.

• the vertical sum of individual demand curves.

• the horizontal sum of individual demand curves.