chapter 3 quiz macroeconomics

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Which of the following is NOT characteristic of a market economy?

Significant government intervention

In a competitive market, the price of the product is

set by market supply and demand

Which of the following firms participates in a competitive market?

A corn farmer

In an imperfect market, individual firms

are able to influence the price of their product.

Which of the following firms operates as a monopoly?

A local water utility

According to the law of demand, what is the relationship between price and quantity demanded?

Inverse

Refer to the following graph.

Click to view enlarged image.

The demand curve slopes downward because

prices and quantity demanded move in opposite directions.

A change in which of the following will cause a change in the quantity demanded of coffee?

The price of coffee

Suppose that burgers and fries are complements in consumption. If the price of fries increases

overall demand for burgers will decrease.

Suppose that Coca Cola and Pepsi are substitutes in consumption. If the price of Coca Cola decreases, then

both the equilibrium price and the quantity of Pepsi demanded will decrease.

According to the law of supply, what is the relationship between price and quantity supplied?

Direct

The supply curve is _______________ driven by the law of supply

Upward sloping

A change in which of the following will cause a change in the quantity supplied of coffee?

The price of coffee

Which of the following will cause a shift in the supply curve for tobacco?

An improvement in the technology used in the production of tobacco

Flour is a factor of production of cupcakes. How will an increase in the price of flour affect the market for cupcakes?

Overall supply will decrease

When a market is in equilibrium, which of the following is true?

Quantity supplied is equal to quantity demanded

At a price of $15, this market is experiencing a(n)

surplus

At a price of $5, this market is experiencing

a shortage

Suppose pasta salad is a normal good. If the price of pasta (a major ingredient in pasta salad) increases and income also increases, the

equilibrium quantity of pasta salad may either increase or decrease and the equilibrium price of pasta salad will increase.

What must happen to the market price in order for a shortage to be eliminated?

price must rise

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