CHAPTER 3 - CHAPTER 3 1 A market A reflects upsloping...

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CHAPTER 3 1. A market: A) reflects upsloping demand and downsloping supply curves. B) entails the exchange of goods, but not services. C) is an institution which brings together buyers and sellers. D) always entails face-to-face contact between buyer and seller. Ans: C 2. The demand curve shows the relationship between: A) money income and quantity demanded. B) price and production costs. C) price and quantity demanded. D) consumer tastes and the quantity demanded. Ans: C 3. A demand curve: A) shows the relationship between price and quantity demanded. B) indicates the quantity demanded at each price in a series of prices. C) graphs as a downsloping line. D) has all of the above characteristics. Ans: D 4. "When the price of a product rises, consumers shift their purchases to other products whose prices are now relatively lower." This statement describes: A) an inferior good. B) the rationing function of prices. C) the substitution effect. D) the income effect. Ans: C 5. One reason why the quantity of a good demanded increases when its price falls is that the: A) price decline shifts the supply curve to the left. B) lower price shifts the demand curve to the left. C) lower price shifts the demand curve to the right.
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This note was uploaded on 10/15/2009 for the course ECON 2302 taught by Professor Parker during the Spring '09 term at University of Texas-Tyler.

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CHAPTER 3 - CHAPTER 3 1 A market A reflects upsloping...

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