macro hw 2 - hw2 Multiple Choice Identify the choice that...

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hw2 Multiple Choice Identify the choice that best completes the statement or answers the question. 1. In a market economy, supply and demand are important because they a. play a critical role in the allocation of the economy’s scarce resources. b. determine how much of each good gets produced. c. can be used to predict the impact on the economy of various events and policies. d. All of the above are correct. 2. For each good produced in a market economy, the interaction of demand and supply determines a. the price of the good, but not the quantity. b. the quantity of the good, but not the price. c. both the price of the good and the quantity of the good. d. neither price nor quantity, because prices and quantities are determined by the sellers of the goods alone. 3. For a competitive market, which of the following statements is correct? a. A seller can always increase her profit by raising the price of her product. b. If a seller charges more than the going price, buyers will go elsewhere to make their purchases. c. A seller often charges less than the going price to increase sales and profit. d. A single buyer can influence the price of the product, but only when purchasing from several sellers in a short period of time. 4. To say that the quantity demanded of a good is negatively related to the price of the good is to say that a. an increase in the quantity demanded of the good leads to a decrease in the price of the good. b. an increase in the price of the good leads to a decrease in the quantity demanded of the good. c. there is a weak relationship between the quantity demanded of a good and the price of the good. d. there is no relationship between the quantity demanded of a good and the price of the good. 5. Which of the following would not be a determinant of the demand for a particular good? a. prices of related goods b. income c. tastes d. the prices of the inputs used to produce the good 6. The amount of the good buyers are willing and able to purchase is called the a. demand. b. quantity demanded. c. supply. d. quantity supplied. 7. Economists in general a. do not try to explain people's tastes, but they do try to explain what happens when tastes change. b. believe that they must be able to explain people's tastes in order to explain what happens when tastes change. c. do not believe that people's tastes determine demand and therefore they ignore the subject of tastes. d. incorporate tastes into economic models only to the extent that tastes determine whether pairs of goods are substitutes or complements. 8. According to the law of demand, a. quantity supplied and quantity demanded are positively related. b. quantity supplied and quantity demanded are negatively related. c. price and quantity demanded are positively related. d. price and quantity demanded are negatively related. 9. A higher price for batteries would result in a(n)
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This note was uploaded on 04/02/2008 for the course ECONOMICS 103 taught by Professor Sheflin during the Spring '08 term at Rutgers.

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macro hw 2 - hw2 Multiple Choice Identify the choice that...

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