Intro Macro Section 4 Sheflin Spring 2009 Assignment 2 B This is our first weekly supplementary assignment. You have to do the following: •Read my explanations for Selected HW 2 Questions (in capitals) below •Watch a 2 minute video clip •Read the very brief news clip •Review the BIG questions from assignment 2 •Use the discussion boards to ask for help for anything you don’t understand. •And then take an online hw quiz dealing with these 1. Explanations for the following HW 2 Questions (MY EXPLANATIONS IN CAPITALS) 6) The law of demand implies that if nothing else changes, there is 6) _______ A) a linear relationship between price of a good and the quantity demanded. B) an exponential relationship between price of a good and the quantity demanded. C) a positive relationship between the price of a good and the quantity demanded. D) a negative relationship between the price of a good and the quantity demanded. D - ‘LAW’ OF DEMAND – WHEN PRICE GOES UP, QUANTITY DEMANDED GOES DOWN. NOT REALLY A LAW, RATHER AN EMPIRICAL REGULARITY. A NEGATIVE RELATIONSHIP MEANS THAT WHEN ONE VARIABLE GOES UP, THE OTHER GOES DOWN 7) Which of the following influences people's buying plans and does notshift the demand curve? 7) _______ A) the prices of related goods B) the price of the good C) preferences D) income B THE QUANTITY OF ANY GOOD OR SERVICE PEOPLE DEMAND (WILLING AND ABLE TO BUY) DEPENDS ON PRICE, INCOME, TASTES, PRICES OF SUBSTITUTES AND COMPLEMENTS. OF THESE, A CHANGE IN PRICE MOVES ONE ALONG THE DEMAND CURVE (IN THE OPPOSITE DIRECTION OF THE PRICE CHANGE – THAT IS INVERSELY), WHILE A CHANGE IN ANY OF THE OTHERS SHIFTS THE WHOLE CURVE 12) A decrease in quantity demanded because of an increase in price is represented by a 12) ______ A) movement up and to the left along the demand curve.
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