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Ch 3 Individual Markets: Demand And Supply

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

  
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1.  If two goods are complementary, an increase in the price of one will tend to increase the demand  for the other.
A.
B.
2.  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.
A.
B.
3.  A market is any arrangement that brings together the buyers and sellers of a particular good or service.
A.
B.
4.  The law of diminishing marginal utility is one explanation of why there is an incerse relationship between price and quantity demanded.
A.
B.
5.  The law of demand states that as price increases, other thing being equal, the quantity of the product demanded increases.
A.
B.
6.  If the demand for a product increases and the supply of the product decreases, the equilibrium price will increase and the equilibrium quantity will be indeterminant.
A.
B.
7.  The rationing function of prices is the elimination of shortages and surpluses.
A.
B.
8.  In graphing supply and demand schedules, supply is put on the horizontal axis and demand on the vertical axis.
A.
B.
9.  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.
10.  If price falls, there will be an increase in demand.
A.
B.
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