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EOC_Answers_Ch04 - Chapter 4 Supply and Demand True or...

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Chapter 4: Supply and Demand True or False 1. Differences in the conditions under which the exchange between buyers and sellers occurs make it difficult to precisely define a market. T 2. All markets are effectively global in scope. F 3. The relationship between price and quantity demanded is inverse or negative. T 4. The market demand curve is the vertical summation of individual demand curves. F 5. A change in a good’s price does not change its demand. T 6. A change in demand is illustrated by a shift in the entire demand curve. T 7. Because personal tastes differ, what are substitutes for one person may not be substitutes for another person. T 8. Two goods are complements if an increase in the price of one causes an increase in the demand for the other. F 9. Those goods for which falling income leads to decreased demand are called inferior goods. F 10. Either an increase in the number of buyers or an increase in tastes or preferences for a good or service will increase the market demand for a good or service. T 11. A decrease in the price of ice cream would cause an increase in the demand for frozen yogurt, a substitute. F 12. The law of supply states that, other things being equal, the quantity supplied will vary directly (a positive relationship) with the price of the good. T 13. The market supply curve for a product is the vertical summation of the supply curves for individual firms. F 14. A change in the price of a good leads to a change in the quantity supplied, but not to a change in its supply. T 1 5. An increase in supply leads to a movement up along the supply curve. F 16. A decrease in supply shifts the supply curve to the left. T 17. Just as demanders will demand more now if the price of a good is expected to rise in the near future, sellers will supply more now if the price of a good is expected to rise in the near future. F 18. Both technological progress and cost-increasing regulations will increase supply. F Multiple Choice 1. Which of the following is a market? a. a garage sale b. a restaurant c. the New York Stock Exchange d. an eBay auction e. all of the above 2. In a competitive market,
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