Question 1

An increase in the price of one good can cause the demand for another good to increase if the goods are complements.
If the price of a good increases,consumers will buy a lower quantity of that particular good along with fewer of the complementary goods regardless of the price of the complement.

Accepted Answer

An increase in the price of one good will cause the demand for another good to decrease if the goods are complements, not increase.

Question 2

"Demand" is a statement of actual purchases.
Demand is an expression of consumer buying intentions,as well as of a willingness to buy,and is therefore,not a statement of actual purchases.

Accepted Answer

The statement "Demand is a statement of actual purchases" is false. Demand refers to the desire or willingness of consumers to purchase a product or service at a particular price and quantity, but it does not necessarily reflect actual purchases. Actual purchases are reflected in sales data.

Question 3

A decrease in the price of bubble gum below equilibrium will

Accepted Answer

A decrease in price below equilibrium means that the quantity demanded will exceed the quantity supplied, causing a shortage of bubble gum. Therefore, the correct choice is D. A decrease in price does not affect the supply or demand curve, so choices A and B are incorrect. While a decrease in price could eventually cause suppliers to decrease the quantity supplied, in the short term, there will be a surplus of bubble gum. Therefore, choice C is also incorrect.

Question 4

An increase in the price of gasoline will

Accepted Answer

An increase in the price of gasoline will decrease the demand for automobiles, leading to a leftward shift in the automobile demand curve. This is because automobiles are complementary goods to gasoline, meaning they are typically consumed together. When the price of one increases, consumers are less likely to purchase both the good and the complementary good at the previous level of consumption, leading to a shift in demand.

Question 5

Money is critical in facilitating market exchanges and the specialization that these exchanges permit.
Every market transaction involves an exchange of dollars for goods or resources.

Accepted Answer

Money serves as a medium of exchange in market transactions, enabling individuals and businesses to acquire the goods and resources they need by exchanging dollars for them. This facilitates the specialization of labor and production which in turn contributes to economic growth and prosperity.

Question 6

If the prices of the factors used to produce a good change,both the demand curve and the supply curve of the good will shift.
A change in the costs of production will impact the supply curve only.

Accepted Answer

A change in the costs of production will affect the supply curve of the good, but it may also affect the demand for the good if the cost change affects consumer preferences or income levels. Therefore, both the demand and supply curves of the good may shift in response to a change in the prices of factors of production.

Question 7

Unlike consumers and business firms,the public sector has no maximizing goals.
The public sector's goal is welfare maximization.

Accepted Answer

The answer of Unlike consumers and business firms,the public sector...

Question 8

A change in price changes the quantity demanded and is represented by a movement along the demand curve.
Movements along a demand curve are a response to price changes for that good.Shifts of the demand curve occur when the determinants of demand change.

Accepted Answer

Movements along a demand curve are due to changes in price, while shifts of the demand curve are due to changes in determinants such as income, preferences, or availability of substitutes.

Question 9

Government goods are delivered "free," which means that they are costless.
There is an opportunity cost associated with every service the government provides.

Accepted Answer

Government goods are not costless; they are funded by taxpayers, and providing these services involves opportunity costs, as resources used could have been employed elsewhere.

Question 10

As a result of specialization and trade,individuals no longer have to make choices about how to spend their incomes.
Because of scarcity,market consumers will always have to make choices.

Accepted Answer

Specialization and trade may increase access to goods and services, but there will always be limited resources and unlimited wants, which creates scarcity and requires individuals to make choices about how to allocate their incomes.

Question 11

When the number of buyers in a market changes,the market demand curve shifts even if individual demand curves do not shift.
A change in the number of buyers causes the market demand curve to shift.

Accepted Answer

The market demand curve represents the sum of individual demand curves in the market, and a change in the number of buyers affects the total quantity demanded in the market, causing the market demand curve to shift. Even if individual demand curves do not shift, the market demand curve may shift as a result of changes in the number of buyers.

Question 12

The term opportunity cost refers to

Accepted Answer

Opportunity cost refers to all the choices that are given up when a particular choice is made. In this case, the opportunity cost of purchasing an item is the value of the next best alternative that was given up.

Question 13

The supply curve shifts to the right when a seller sells a good.
The market supply curve is a summary of the supply intentions of all producers.

Accepted Answer

The supply curve shifts to the right when there is an increase in supply, not just when a seller sells a good. The market supply curve represents the total supply intentions of all producers, not individual sales.

Question 14

According to the law of demand,a decrease in price leads to an increase in quantity demanded.
A decrease in price increases consumers' willingness and ability to buy a product.

Accepted Answer

The law of demand states that as the price of a good or service decreases, the quantity demanded by consumers will increase, all else being equal. This is because lower prices increase consumers' willingness and ability to purchase the good or service. Conversely, as the price of a good or service increases, the quantity demanded by consumers will decrease.

Question 15

The basic goals of total utility maximization,total profit maximization,and total welfare maximization explain most market activity.
The goal of consumers is to maximize total utility,the business firm's goal is to maximize total profit,and the government's goal is total welfare maximization.

Accepted Answer

This statement is true as the basic goals of total utility maximization, total profit maximization, and total welfare maximization are the driving forces behind market activity for consumers, business firms, and the government, respectively.

Question 16

An increase in the price of one good can cause the demand for another good to increase if the goods are substitutes.
If the price of a good increases,consumers will respond by buying more of the relatively cheaper alternative (substitute).

Accepted Answer

This is the definition of substitute goods. As the price of one good increases, consumers will switch to the substitute good, causing an increase in demand for it.

Question 17

One of the two reasons why we are driven to buy and sell goods and services in the market is that most of us are incapable of producing everything we want to consume.
Individuals have an absolute inability to produce all the things we need and desire.

Accepted Answer

This statement is true. Most individuals have limited resources, time, and skills, which make it impossible for them to produce everything they need and want. Therefore, they need to engage in the market and trade with others to obtain the goods and services they require but cannot produce themselves.

Question 18

Markets require a physical location to permit sellers to supply money to buyers for goods and services.
Markets exist wherever and whenever an exchange takes place,even in cyberspace.

Accepted Answer

The statement is false. While markets can exist in physical locations, they can also exist online and in other non-physical forms, such as through phone or email transactions.

Question 19

An increase in the price of gasoline above equilibrium will

Accepted Answer

An increase in the price of gasoline above the equilibrium price causes a surplus because the quantity supplied exceeds the quantity demanded at that price.

Question 20

Land,labor,and capital are bought and sold in the product market.
Land,labor,and capital are bought and sold in the factor market.

Accepted Answer

Land, labor, and capital are bought and sold in the factor market, not the product market. The product market is where finished goods and services are sold.

Quiz 3: Supply and Demand

An increase in the price of one good can cause the demand for another good to increase if the goods are complements. If the price of a good increases,consumers will buy a lower quantity of that particular good along with fewer of the complementary goods regardless of the price of the complement.

"Demand" is a statement of actual purchases. Demand is an expression of consumer buying intentions,as well as of a willingness to buy,and is therefore,not a statement of actual purchases.

A decrease in the price of bubble gum below equilibrium will

An increase in the price of gasoline will

Money is critical in facilitating market exchanges and the specialization that these exchanges permit. Every market transaction involves an exchange of dollars for goods or resources.

If the prices of the factors used to produce a good change,both the demand curve and the supply curve of the good will shift. A change in the costs of production will impact the supply curve only.

Unlike consumers and business firms,the public sector has no maximizing goals. The public sector's goal is welfare maximization.

A change in price changes the quantity demanded and is represented by a movement along the demand curve. Movements along a demand curve are a response to price changes for that good.Shifts of the demand curve occur when the determinants of demand change.

Government goods are delivered "free," which means that they are costless. There is an opportunity cost associated with every service the government provides.

As a result of specialization and trade,individuals no longer have to make choices about how to spend their incomes. Because of scarcity,market consumers will always have to make choices.

When the number of buyers in a market changes,the market demand curve shifts even if individual demand curves do not shift. A change in the number of buyers causes the market demand curve to shift.

The term opportunity cost refers to

The supply curve shifts to the right when a seller sells a good. The market supply curve is a summary of the supply intentions of all producers.

According to the law of demand,a decrease in price leads to an increase in quantity demanded. A decrease in price increases consumers' willingness and ability to buy a product.

The basic goals of total utility maximization,total profit maximization,and total welfare maximization explain most market activity. The goal of consumers is to maximize total utility,the business firm's goal is to maximize total profit,and the government's goal is total welfare maximization.

An increase in the price of one good can cause the demand for another good to increase if the goods are substitutes. If the price of a good increases,consumers will respond by buying more of the relatively cheaper alternative (substitute).

One of the two reasons why we are driven to buy and sell goods and services in the market is that most of us are incapable of producing everything we want to consume. Individuals have an absolute inability to produce all the things we need and desire.

Markets require a physical location to permit sellers to supply money to buyers for goods and services. Markets exist wherever and whenever an exchange takes place,even in cyberspace.

An increase in the price of gasoline above equilibrium will

Land,labor,and capital are bought and sold in the product market. Land,labor,and capital are bought and sold in the factor market.