HW3_09sol - ECO 108: Introduction to Economics Problem Set...

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3-1 ECO 108: Introduction to Economics Problem Set 3 Chapter 3 Professor: Eva Carceles-Poveda 1. Buyers and sellers of a particular good comprise the A. market for the good. B. demand for the good. C. supply for the good. D. production possibilities curve for the good. 2. The demand curve illustrates the fact that consumers A. tend to purchase more of a good as its price rises. B. purchase name brand products more frequently than generic products. C. tend to purchase more of a good as its price falls. D. purchase more of a good as their incomes rise. 3. Which of the following is NOT true of a demand curve? A. It has negative slope. B. It shows the amount consumers are willing and able to purchase at various prices, holding other factors constant. C. It relates the price of an item to the quantity demanded of that item. D. It shows how an increase in price leads to an increase in quantity demanded of a good. 4. As coffee becomes more expensive, Joe starts drinking tea, therefore quantity demanded for coffee decreases. This is called A. the income effect. B. the change in equilibrium. C. the substitution effect. D. a shift in the demand curve. 5. You can spend $5 for lunch and you would like to have two Double Cheeseburgers. When you get to the restaurant you, find out the price for Double Cheeseburger has increased from $2.50 to $2.99. You decide to have two single Cheeseburgers for lunch. This is best described as a(n) A. substitution effect. B. income effect. C. buyer's reservation price. D. seller's reservation price.
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3-2 6. Sellers tend to offer _______ for sale as price increases, and so the supply curve is ______ sloping. A. goods; not B. more; downward C. less; upward D. more; upward 7. Jessica's marginal cost for producing a pitcher of lemonade is $0.25. Therefore, $0.25 can also be called her A. marginal revenue. B. equilibrium price. C. reservation price. D.
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HW3_09sol - ECO 108: Introduction to Economics Problem Set...

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