Chapter 3

Chapter 3 - SS141 Macro-Economics Professor Patrick Yanez...

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SS141 Macro-Economics Professor Patrick Yanez Study Questions for Chapter 3 - Set 1 These questions are to facilitate your discussion groups and/or tutoring sessions. Answers are listed at the end of this file. Since our class time is limited to introducing new topics, we do not have time to review these questions in class; please use your discussion group and/or tutoring session to review these questions. 1. A market: A) reflects upsloping demand and downsloping supply curves. B) entails the exchange of goods, but not services. C) is an institution that brings together buyers and sellers. D) always requires face-to-face contact between buyer and seller. 2. Markets explained on the basis of supply and demand: A) assume many buyers and many sellers of a standardized product. B) assume market power so that buyers and sellers bargain with one another. C) do not exist in the real-world economy. D) are approximated by markets in which a single seller determines price. 3. The law of demand states that: A) price and quantity demanded are inversely related. B) the larger the number of buyers in a market, the lower will be product price. C) price and quantity demanded are directly related. D) consumers will buy more of a product at high prices than at low prices. 4. Graphically, the market demand curve is: A) steeper than any individual demand curve that is part of it. B) greater than the sum of the individual demand curves. C) the horizontal sum of individual demand curves. D) the vertical sum of individual demand curves. 5. Economists use the term demand to refer to: A) a particular price-quantity combination on a stable demand curve. B) the total amount spent on a particular commodity over a stipulated time period. C) an upsloping line on a graph that relates consumer purchases and product price. D) a schedule of various combinations of market prices and amounts demanded. 6. The relationship between quantity supplied and price is _____ and the relationship between quantity demanded and price is _____. A) direct, inverse B) inverse, direct C) inverse, inverse D) direct, direct 7. When the price of a product increases, a consumer is able to buy less of it with a given money income. This describes: A) the cost effect. B) the inflationary effect. C) the income effect. D) the substitution effect.
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This note was uploaded on 07/13/2011 for the course ACC 201 taught by Professor Kaiama during the Spring '08 term at Hawaii.

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Chapter 3 - SS141 Macro-Economics Professor Patrick Yanez...

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