Principles of Macroeconomics: A Study Guide

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Chapter 3: Demand, Supply, and Market Equilibrium True or False
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1. A decrease in the price of a good causes more demand for that good. TRUE FALSE 2. An increase in market price shifts the supply curve to the right. TRUE FALSE 3. A decrease in the preference of consumers for a good will result in lower demand for that good. This indicates a positive relationship between consumer preferences and demand for a good. TRUE FALSE
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4. The higher the price of a substitute good, the higher the demand for the good in question. TRUE FALSE 5. The tendency in most markets is for price to deviate away from equilibrium, and for
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Unformatted text preview: quantity to remain in equilibrium most of the time. TRUE FALSE 6. A price ceiling is an imposed price above equilibrium price. TRUE FALSE 7. When supply and demand both increase, equilibrium price will always increase. TRUE FALSE 8. An increase in supply, accompanied by an increase in demand, always leads to an increase in equilibrium quantity. TRUE FALSE 9. Market supply is the sum of the quantities supplied by all the firms in the market at each and every price. TRUE FALSE 10. Sometimes, an increase in income causes demand for a good to fall. TRUE FALSE...
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