chap003 - Chapter 003 Supply and Demand Multiple Choice...

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Unformatted text preview: Chapter 003 Supply and Demand Multiple Choice Questions 1. In Cuba, a bureaucratic committee makes the production decisions for the country's firms and factories. Therefore Cuba is an example of a A. centralized economy. B. capitalist economy. C. mixed economy. D. pure free-market economy. 2. A good example of central planning at work in the USA would be A. Burger King's value meal price control. B. McDonald's fries being the same everywhere in the USA. C. union wages. D. New York City's rent control. 3. The entire group of buyers and sellers of a particular good or service makes up A. only the demand curve. B. only the supply curve. C. a market. D. equilibrium. 4. In order to understand how the price of a good is determined in the free market, one must account for the desires of: A. purchasers exclusively. B. sellers exclusively. C. governmental agencies exclusively. D. purchasers and sellers. 5. 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. 3-1 Chapter 003 Supply and Demand 6. In a market, the demanders are the _______ and the suppliers are the ______. A. bosses; workers B. poor; wealthy C. buyers; sellers D. sellers; buyers 7. "Holding all other relevant factors constant, consumers will purchase more of a good as the price falls." This statement reflects the behavior underlying A. the demand curve. B. an increase in demand. C. the supply curve. D. a decrease in the demand curve. 8. 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. 9. 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. 10. A demand curve is ________ sloping because __________________. A. downward; of increasing opportunity costs. B. upward; people prefer to purchase high quality consumer goods. C. downward; reservation prices tend to fall over time. D. downward; fewer people are willing to buy the item at higher prices. 3-2 Chapter 003 Supply and Demand 11. 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....
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chap003 - Chapter 003 Supply and Demand Multiple Choice...

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