The markets examined in this chapter

1. Chapter 3 Material 1 The markets examined in this chapter� Are highly competitive Sell nonstandard or differentiated products Have buyers cooperating to determine prices Are controlled by a single producer

2. Chapter 3 Material 2 A schedule which shows the various amounts of a product consumers are willing and able to purchase at each price in a series of possible prices during a specified period of time is called� Quantity supplied Quantity demanded Supply Demand

3. Chapter 3 Material 3 The reason for the law of demand can best be explained in terms of� Diminishing marginal utility The rationing function of prices Supply Complementary goods

4. Chapter 3 Material 4 Assume that in a competitive market video tape players (VCRs) double in price. What will be most likely happen in the market to the equilibrium price and quantity of video tapes? Price will increase; quantity will decrease Price will decrease; quantity will increase Price will increase; quantity will increase Price will decrease; quantity will decrease

5. Chapter 3 Material 5 Given the following individuals� demand schedule for product X, and assuming these are the only three consumers of X, which set of prices and output levels below will be on the market demand curve for this product? ($5, 3) and ($1, 18) ($5, 2) and ($1, 10) ($4, 6) and ($2, 12) ($4, 0) and ($1, 3)

6. Chapter 3 Material 6 Which factor will decrease the demand for a product? A favorable change in consumer tastes An increase in the price of a substitute good A decrease in the number of buyers A decrease in the price of a complementary good

7. Chapter 3 Material 7 The income of a consumer decreases and consumer�s demand for a particular good increases. It can be concluded that the good is� A complement Normal Inferior A substitute

8. Chapter 3 Material 8 Which of the following could cause a decrease in consumer demand for product X? An increase in the prices of goods which are good substitutes for product X An increase in the price which consumers expect will prevail for product X in the future A decrease in the supply of product X A decrease in consumer income

9. Chapter 3 Material 9 If two goods are substitutes for each other, an increase in the price of one will necessarily� Decrease the quantity demanded of the other Decrease the demand for the other Increase demand for the other Increase the quantity demanded of the other

10. Chapter 3 Material 10 If two products, A and B, are complements, then� An increase in the price of A will decrease the demand for B An increase in the price of A will increase demand for B An increase in the price of A will have no significant effect on the demand for B An decrease in the price of A will decrease demand for B

11. Chapter 3 Material 11 If two products, X and Y, are independent goods, then� An increase in the price of Y will have no significant effect on the demand for X An increase in the price of X will significantly increase the demand for Y An increase in the price of Y will significantly increase the demand for X A decrease in the price of X will significantly increase the demand for Y

12. Chapter 3 Material 12 The law of supply states that, other things being constant, as price increases� Supply increases Supply decreases Quantity supplied decreases Quantity supplied increases

13. Chapter 3 Material 13 If the supply curve moves from S1 to S2 on the graph below, there has been� A decrease in supply An increase in supply An increase in quantity supplied A decrease in quantity supplied

14. Chapter 3 Material 14 A decrease in the supply of a product would most likely be caused by� An increase in business taxes An increase in consumer taxes A decrease in resource costs for production A decrease in the price of a complementary good

15. Chapter 3 Material 15 Which of the following could not cause an increase in the supply of cotton? A increase in the price of corn An increase in the price of cotton Improvements in the art of producing cotton A decrease in the price of machinery and tools employed in cotton production

16. Chapter 3 Material 16 If the quantity supplied of a product is greater than the quantity demanded for a product, then� There is a shortage of the product The product is a normal good The product is an inferior good There is a surplus of the product

17. Chapter 3 Material 17 When government sets the price of a good and that price is below the equilibrium price, the result will be� A surplus of the good An increase in the demand for the good A decrease in the supply of the good A shortage of the good

18. Chapter 3 Material 18 The equilibrium price in this market is�

19. Chapter 3 Material 19 An increase in the cost of labor lowers the quantity supplied by 65 units at each price. The new equilibrium price would be�

20. Chapter 3 Material 20 If the quantity demanded at each price increases by 130 units, then the new equilibrium quantity will be�

21. Chapter 3 Material 21 A decrease in supply and a decrease in demand will� Affect price in an indeterminable way and decrease the quantity exchanged Increase price and decrease the quantity exchanged Decrease price and increase the quantity exchanged Increase price and affect the quantity exchanged in an indeterminate way

22. Chapter 3 Material 22 An increase in demand and a decrease in supply will� Increase price and increase the quantity exchanged Decrease price and decrease the quantity exchanged Decrease price and the effect upon quantity exchanged will be indeterminate Increase price and the effect upon quantity exchanged will be indeterminate

23. Chapter 3 Material 23 An increase in supply and an increase in demand will� Increase price and increase the quantity exchanged Decrease price and increase the quantity exchanged Affect price in an indeterminable way and decrease the quantity exchanged Affect price in an indeterminable way and increase the quantity exchanged

24. Chapter 3 Material 24 A cold spell in Florida devastates the orange crop. As a result, California oranges command a higher price. Which of the following statements best explains the situation? The supply of Florida oranges decreases, causing the supply of California oranges to increase and their price to increase The supply of Florida oranges decreases, causing the supply of California oranges to decrease and their price to increase The demand for Florida oranges decreases, causing a greater demand for California oranges and an increase in their price The supply of Florida oranges decreases, causing their price to increase and the demand for California oranges to increase

25. Chapter 3 Material 25 Assume that the market is initially in equilibrium where D1 and S1 intersect. If there is an increase in the number of buyers, then the new equilibrium would most likely be at point�. W X Y Z

26. Chapter 3 Material 26 Assume that the equilibrium price and quantity in the market are P2 and Q2. Which factor would cause the equilibrium price and quantity to shift to P1 and Q3? An increase in supply A decrease in quantity An increase in product price An increase in demand

27. Chapter 3 Material 27 If the market equilibrium was at point Y but the price of the product was set at P1, then there would be a� Surplus of Q3-Q1 Shortage of Q3-Q1 Surplus of Q1-Q2 Shortage of Q2-Q1

28. Chapter 3 Material 28 What would cause a shift in the equilibrium price and quantity form point Z to point X? A decrease in production costs and more favorable consumer tastes for the product An increase in the number of suppliers and an increase in consumer incomes An improvement in production technology and decrease in the price of a substitute good An increase in production costs and decrease in consumer incomes

29. Chapter 3 Material 29 Assume that the market is initially in equilibrium where D1 and S1 intersect. If consumer incomes increased and the technology of making the product improved, then the new equilibrium would most likely be at� W X Y Z

30. Chapter 3 Material 30 The demand curve and its inverse relationship between price and quantity demanded is based on the assumption of� Changing expectations Complementary goods Increasing marginal utility Other things equal