Ch 3 Individual Markets: Demand And Supply

10 Questions  I  By Ecofanics
Review for ch 3 McConnell and Brue 15 ed.

  
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1.  Economists often make the assumption of other things equal to hold constant the effects of other factors when examining the relationship between prices and quantities demanded and supplied.
A.
B.
2.  If the market price of a product is below its equilibrium price, the market price will will tend to rise because demand will decrease and supply will increase.
A.
B.
3.  If consumer tastes or preferences for a product decrease, the demand for the product will tend to decrease.
A.
B.
4.  A change in the quantity demanded means that there has been a change in demand.
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B.
5.  The rationing function of prices is the elimination of shortages and surpluses.
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B.
6.  The equilibrium price of a good is the price at which the demand and the supply of the good are equal.
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B.
7.  A surplus indicates that the quantity demanded is less that the quantity supplied.
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B.
8.  An increase in income will tend to increase the demand for a product.
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B.
9.  The substitution effect suggests that, at a lower price, you have the incentive to substitute the more expensive product for similar products which are relatively less expensive.
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B.
10.  If the supply of a product increases and the demand decreases, the equilibrium price and quantity will increase.
A.
B.
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