Deck 3: Markets

Question 1

The best example of a standardized good would be:

A)corn.
B)a handbag.
C)an autographed baseball.
D)None of these could be considered a standardized good.

Answer 1

corn.

Question 2

A perfectly competitive market is one in which:

A)fully informed,price-taking buyers and sellers easily trade a standardized good or service.
B)fully informed,price-making buyers and seller easily trade a standardized good or service.
C)uninformed,price-taking buyers and sellers easily trade a standardized good or service.
D)uninformed,price-making buyers and seller easily trade a standardized good or service.

Answer 2

fully informed,price-taking buyers and sellers easily trade a standardized good or service.

Question 3

The law of demand describes the:

A)inverse relationship between price and quantity demanded.
B)direct relationship between price and quantity demanded.
C)inverse relationship between income and quantity demanded.
D)direct relationship between income and quantity demanded.

Answer 3

inverse relationship between price and quantity demanded.

Question 4

Shopping at a warehouse,such as Sam's Club or Costco,allows its members to pay very low prices on the goods and services they buy.Customers who shop at such a store incur:

A)transaction costs because they must be members to shop there.
B)no transaction costs because they pay prices that are lower than any other location.
C)transaction costs because they must buy a product in bulk.
D)no transaction costs because members can return any item purchased for any reason.

Question 5

Transaction costs can be defined as:

A)the costs incurred by buyer and seller in agreeing to and executing a sale of goods or services.
B)the costs the government must pay to allow for an exchange.
C)the costs the government must pay to ensure the execution of a sale of goods or services takes place.
D)the costs the government incur to create a structured market for the exchange of buyers and sellers.

Question 6

The term market refers to:

A)the physical location where buyers and sellers meet to exchange goods for money.
B)the buyers and sellers who trade a particular good or service,not to a physical location.
C)the location where buyers go to fulfill their wants and needs.
D)a physical or virtual place of exchange.

Question 7

The market for used cars is not considered perfectly competitive because:

A)there is incomplete information.
B)the buyers are not price takers.
C)the good is not standardized.
D)All of these are reasons why the used car market is not considered perfectly competitive.

Question 8

The amount of a particular good that buyers in a market will purchase at a given price during a specified period is called:

A)quantity demanded.
B)quantity supplied.
C)demand.
D)supply.

Question 9

The buyers and sellers who trade a particular good or service make up what we call a:

A)market.
B)store.
C)mall.
D)barterers.

Question 10

A standardized good or service is one:

A)for which any two units of it have the same features and are interchangeable.
B)for which any two units of it have similar features that could be considered close substitutes.
C)for which any two units of it have different,unique features.
D)that has very distinguishable characteristics,with each unit being economically unique.

Question 11

Perfectly competitive markets:

A)are the most common type of market in our economy.
B)are hard to find.
C)are made up principally by consumer goods.
D)are typically found in industrial sectors of our economy.

Question 12

Buyers and sellers are included in the market under consideration by:

A)their physical proximity.
B)the context.
C)their preferences.
D)the income levels.

Question 13

Demand describes how much of something people:

A)are willing and able to buy under certain circumstances.
B)want,but may not necessarily be able,to buy under certain circumstances.
C)are willing and able to sell under certain circumstances.
D)want,but may not necessarily be able,to sell under certain circumstances.

Question 14

For almost all goods,the:

A)lower the price goes,the higher the quantity demanded.
B)higher the price goes,the more luxurious it is.
C)lower the price goes,the lower the quantity demanded.
D)higher the price goes,the higher the quantity demanded.

Question 15

In order to sell certified diamonds,the seller must be a certified gemologist.This means the diamond market therefore:

A)has incomplete information.
B)has transaction costs.
C)has price-makers.
D)All of these statements are true.

Question 16

The best example of a perfectly competitive market would be the market for:

A)grain.
B)shoes.
C)coffee.
D)cameras.

Question 17

In economic terminology,a buyer or seller who cannot affect the market price is called a:

A)price taker.
B)price maker.
C)price setter.
D)price signaler.

Question 18

The four important characteristics that define a competitive market are:

A)standardized good,full information,no transactions costs,participants are price takers.
B)standardized information,finished good,no transactions costs,participants are price makers.
C)standardized good,same information for buyer and seller,low transactions costs,participants are price takers.
D)standardized good,full information,no transactions costs,participants are price makers.

Question 19

An economy where private individuals who are guided by the invisible hand make decisions is known as a:

A)market economy.
B)centrally planned economy.
C)socialist economy.
D)barter economy.

Question 20

A price taker is:

A)a buyer or seller who cannot affect the market price.
B)a buyer or seller who takes the market price and chooses to increase or decrease it.
C)a buyer or seller who takes prices in the area and averages them together to set the price for his/her good.
D)None of these statements is true.

Question 21

The law of demand can be stated as:

A)all else equal,quantity demanded rises as price falls.
B)all else equal,quantity demanded rises as price rises.
C)all else equal,quantity demanded rises as income rises.

Question 22

The demand schedule assumes:

A)that factors other than price remain the same.
B)that factors other than price must also be in the table.
C)that factors other than price remain separate in the table.
D)that price remains the same while all other factors change.

Question 23

When graphing the demand curve:

A)quantity goes on the horizontal axis and price goes on the vertical axis.
B)quantity goes on the vertical axis and price goes on the horizontal axis.
C)Both quantity and price go on the horizontal axis.
D)It doesn't matter which axis price and quantity are placed on.

Question 24

The most likely substitute good for cereal would be:

A)a bagel.
B)milk.
C)shoes.
D)a textbook.

Question 25

A table which shows the quantities of a particular good or service that consumers are willing to purchase at various prices is known as:

A)a demand schedule
B)a demand table
C)a demand curve
D)a demand graph

Question 26

The demand curve represents the relationship between:

A)price and quantity demanded with everything else held constant.
B)income and quantity demanded with everything else held constant.
C)consumer preferences and quantity demanded with everything else held constant.
D)income and price demanded with everything else held constant.

Question 27

The demand curve:

A)represents consumers' willingness to buy.
B)shows the highest amount consumers will pay for any given quantity.
C)visually displays the demand schedule.
D)All of these statements are true.

Question 28

The most likely substitute good for hot dogs would be:

A)ketchup.
B)burgers.
C)a grill.
D)a plate.

Question 29

Jackie notices everyone wearing Converse sneakers on the first day of school.Ever the fashionista,this will likely affect:

A)Jackie's income,as she now needs to buy Converse and will have less to spend on other goods.
B)Jackie's preferences for shoes,since she feels as though she needs them now.
C)Jackie's expectations of future prices,since the price of Converse will likely go up because they're getting so popular.
D)the prices of related goods,since other shoes will be less popular and cost less now.

Question 30

Some nonprice determinants of demand are:

A)consumer preferences,expectations of future prices,and the number of buyers in the market.
B)consumer preferences,the price of the good,and incomes.
C)incomes,expectations of future prices,and the number of sellers in the market.
D)prices of related goods,knowledge of past prices,and the number of buyers in the market.

Question 31

The demand curve:

A)is a downward-sloping line that reflects the inverse relationship between price and quantity.
B)is an upward-sloping line that reflects the inverse relationship between price and quantity.
C)is a downward-sloping line that reflects the direct relationship between price and quantity.
D)is an upward-sloping line that reflects the direct relationship between price and quantity.

Question 32

A demand curve:

A)visually displays the demand schedule.
B)is a graph depicting various price-quantity combinations of a good.
C)is a graph that shows the quantities demanded by consumers of a particular good or service at various prices.
D)All of these statements are true.

Question 33

The "Made in the USA" campaign was popularized by unions in an effort to influence which determinant of demand?

A)Incomes
B)Preferences
C)Expectations of future prices
D)Prices of related goods

Question 34

A demand schedule is:

A)a table which shows the quantities of a particular good or service that consumers are willing to purchase at various prices.
B)a graph which shows the quantities of a particular good or service that consumers are willing to purchase at various prices.
C)a curve which shows the quantities of a particular good or service that consumers are willing to purchase at various prices.
D)a line which shows the quantities of a particular good or service that consumers are willing to purchase at various prices.

Question 35

The most likely complementary good for cereal would be:

A)a bagel.
B)milk.
C)shoes.
D)a textbook.

Question 36

An article about how coffee boosts critical thinking is likely to affect which determinant of demand?

A)Incomes
B)Preferences
C)Number of sellers in the market
D)Price

Question 37

A change in a nonprice factor of demand will cause:

A)a movement along the demand curve.
B)a shift of the demand curve.
C)the demand curve to rotate inward.
D)the demand curve to rotate outward.

Question 38

The most likely complementary good for hot dogs would be:

A)ketchup.
B)burgers.
C)a grill.
D)a plate.

Question 39

Ceteris paribus is:

A)the Latin term for "all other things being the same."
B)necessary for the definition of the law of demand.
C)often used by economists to isolate the effect of a single change.
D)All of these statements are true.

Question 40

A nonprice determinant of demand refers to:

A)something that affects the price other than demand.
B)something that affects demand other than the price.
C)something that determines how large a role prices play in the demand decision.
D)something that determines how prices are affected by income.

Question 41

A decrease in the price of spaghetti is likely to cause:

A)an increase in the demand for penne pasta due to a change in the price of a complementary good.
B)an increase in the demand for penne pasta due to a change in the price of a substitute good.
C)a decrease in the demand for penne pasta due to a change in the price of a complementary good.
D)a decrease in the demand for penne pasta due to a change in the price of a substitute good.

Question 42

As part of recent cutbacks,Paul just accepted a 10% cut in pay.Now he brews coffee at home instead of stopping at Starbucks every day.Based on this behavior,we can say:

A)home-brewed coffee is a normal good,and Starbucks coffee is an inferior good for Paul.
B)home-brewed coffee and Starbucks coffee are substitute goods for Paul.
C)home-brewed coffee will become a normal good for Paul over time.
D)We cannot make any of these assumptions about Paul.

Question 43

An increase in the price of Nike sneakers will likely cause:

A)a movement along the demand curve for Nike sneakers.
B)an inward shift of the demand curve for Adidas sneakers.
C)an outward shift of the demand curve for Nike sneakers.
D)a rotation of the demand curve for Nike sneakers around the price-point change.

Question 44

A decrease in the price of spaghetti is likely to cause:

A)a movement along the demand curve.
B)an inward shift of the demand curve.
C)an outward shift of the demand curve.
D)a rotation of the demand curve around the price-point change.

Question 45

John just won the Megamillions jackpot.We can assume that:

A)his demand for all normal goods will increase.
B)his demand for all inferior goods will increase.
C)his demand for all normal goods will decrease.
D)his demand for all normal goods will stay the same.

Question 46

After getting a raise at work,Jasper now regularly buys steak instead of chicken.Which factor of demand has influenced Jasper's demand for steak?

A)Price of a substitute good
B)Price of a complementary good
C)Income
D)Preferences

Question 47

An increase in the price of Heinz ketchup is likely to cause:

A)an increase in the demand for Hunt's catsup,due to a change in preferences.
B)an increase in the demand for Hunt's catsup,due to a change in the price of a substitute good.
C)a decrease in the demand for Hunt's catsup,due to a change in preferences.
D)an increase in the demand for Hunt's catsup,due to a change in the price of a complementary good.

Question 48

The latest news report stated that the housing market is making a comeback and that house prices are on the rise.This information is likely to:

A)increase demand for houses now due to a change in expectations of future prices.
B)decrease demand for houses now due to a change in expectations of future prices.
C)have no effect on the current housing market,but will increase demand in the future.
D)have no effect on the current demand for housing,but will decrease current supply.

Question 49

Demand for Snickers bars will decrease if:

A)the price of Snickers bars decreases.
B)a news story claiming 95% of all geniuses eat at least one Snickers bar a day is released.
C)the price of Milky Way bars decreases.
D)the price of Milky Way bars increases.

Question 50

A decrease in the price of ice cream is likely to cause:

A)an increase in the demand for ice cream cones due to a change in the price of a complementary good.
B)an increase in the demand for ice cream cones due to a change in the price of a substitute good.
C)an increase in the demand for ice cream cones due to a change in the preferences of consumers.
D)a decrease in the demand for ice cream cones due to a change in the price of a related good.

Question 51

An increase in the price of ice cream is likely to cause:

A)a movement along the demand curve.
B)an inward shift of the demand curve.
C)an outward shift of the demand curve.
D)a rotation of the demand curve around the price-point change.

Question 52

Demand for Shell gasoline will increase if:

A)an article stating that Shell refused to clean up a recent oil spill is released.
B)the price of BP gasoline increases.
C)the price of BP gasoline decreases.
D)the price of Shell gasoline decreases.

Question 53

An increase in the price of butter is likely to cause:

A)the demand for margarine to increase.
B)the demand for margarine to stay the same.
C)the demand for butter to increase.
D)the demand for butter to stay the same.

Question 54

Bob just got laid off and now has no income.We can assume that:

A)his demand for all normal goods will increase.
B)his demand for all inferior goods will increase.
C)his demand for all inferior goods will decrease.
D)his demand for all normal goods will stay the same,but will decrease for inferior goods.

Question 55

After getting a raise at work,Jennie now regularly buys steak instead of hamburger.Based on this behavior,we can assume:

A)steak is a normal good,and hamburger is an inferior good for Jennie.
B)steak is an inferior good,and hamburger is a normal good for Jennie.
C)steak and hamburger are complementary goods to Jennie.
D)We cannot make any of these assumptions about Jennie.

Question 56

Junie is shopping for dinner.She picks up a package of hot dogs on sale,instead of the burgers she was intending to buy.She then heads over to buy a package of hot dog buns.Junie's change in the demand for hot dog buns is due to:

A)a change in the price of related goods.
B)a change in Junie's income.
C)a change in Junie's preferences.
D)a change in Junie's expectation of future prices.

Question 57

We say that goods are substitutes when they:

A)serve similar-enough purposes that a consumer might purchase one in place of the other.
B)are related goods that are consumed together,so that purchasing one will make a consumer more likely to purchase the other.
C)can replace something consumers typically purchase at a significantly lower price.
D)change a consumer's preferences.

Question 58

We say that goods are complements when they:

A)serve similar-enough purposes that a consumer might purchase one in place of the other.
B)are related goods that are consumed together,so that purchasing one will make a consumer more likely to purchase the other.
C)can replace something consumers typically purchase at a significantly lower price.
D)change a consumer's preferences.

Question 59

Jan heads to the store to buy burgers for dinner.Seeing a sale on hot dogs,she buys those instead.The change in her demand for burgers is due to which factor?

A)Preferences
B)Income
C)Prices of related goods
D)Number of buyers

Question 60

Apple just announced it will be coming out with the newest model iPhone in the next six months.One could reasonably expect demand for the current model of iPhone to:

A)decrease due to a change in expectations of future prices.
B)increase due to a change in expectations of future prices.
C)increase due to limited supply of the current model.
D)decrease due to the change in price of a substitute good.

Question 61

The city of Burlington is a very popular town for tourists to visit in the summer.We would expect:

A)the demand for normal goods to increase each summer.
B)the demand for normal goods to decrease each summer.
C)the prices of all normal goods to decrease each summer.
D)the demand curve for normal goods to shift to the left.

Question 62

This graph depicts the demand for a normal good.
A movement from B to A in the graph shown might be caused by:

A)a decrease in the good's price.
B)an increase in the good's price.
C)a decrease in the price of a substitute.
D)an increase in the price of a substitute.

Question 63

Darren loves to go to the movies,and he just learned that he can buy a ticket at a discounted price if he shows his student ID.Darren now attends the movies even more often.The change in Darren's behavior would be shown graphically by:

A)a rightward shift in his demand curve.
B)a leftward shift in his demand curve.
C)a movement down along his demand curve.
D)a movement up along his demand curve.

Question 64

This graph depicts the demand for a normal good.
A movement from A to B in the graph shown might be caused by:

A)a decrease in the price of a substitute.
B)a decrease in the price of a complement.
C)an increase in the price of a complement.
D)an increase in the good's price.

Question 65

Tom was out shopping for a sweater and learned that they will all go on sale tomorrow.We would expect Tom's demand for sweaters today to:

A)increase.
B)shift to the left.
C)move down along his demand curve.
D)move upward along his demand curve.

Question 66

Which of the following would not affect an individual's demand?

A)Prices of related goods
B)An individual preferences
C)An individual's income
D)Number of buyers

Question 67

What happens to the demand curve when a nonprice determinant of demand changes?

A)The demand curve shifts horizontally.
B)There is a movement along the demand curve.
C)The consumer moves to a different price point.
D)Nothing changes in this situation.

Question 68

There has been an increase in the demand for chicken.This change can be shown graphically as:

A)a shift in the demand curve to the right.
B)a shift in the demand curve to the left.
C)a movement along the demand curve to the right.
D)a movement along the demand curve to the left.

Question 69

The baby boomer generation is just starting to retire,and waiting lists to get into nursing homes are on the rise.We could reasonably expect:

A)the demand for geriatric care to increase due to the number of buyers increasing.
B)the demand for geriatric care to decrease due to the number of buyers increasing.
C)the demand for geriatric care to increase due to expectations of future prices.
D)the demand for geriatric care to decrease due to expectations of future prices.

Question 70

The city of Burlington gets very hot each summer and very cold each winter.We would expect:

A)the demand for lemonade to increase constantly.
B)the demand for lemonade to decrease each summer and increase each winter.
C)the demand for lemonade to increase each summer and decrease each winter.
D)the demand for lemonade to decrease constantly.

Question 71

Ray's company just announced everyone will be getting their pay cut by 5% in order to avoid having to close down.Ray's demand for coffee,a normal good,will likely:

A)decrease,and his demand curve will shift to the right.
B)decrease,and his demand curve will shift to the left.
C)increase,and his demand curve will shift to the right.
D)increase,and his demand curve will shift to the left.

Question 72

You just heard about Burton's annual tent sale going on next week.This will likely cause your demand for a Burton jacket today to:

A)increase because of your income constraint.
B)increase because of your expectations of the price of Burton jackets next week.
C)decrease because of your income constraint.
D)decrease because of your expectations of the price of Burton jackets next week.

Question 73

Roy just got a big promotion at work which includes a sizable pay increase.Roy's demand for Ramen Noodles,an inferior good,will likely:

A)decrease,and his demand curve will shift to the right.
B)decrease,and his demand curve will shift to the left.
C)decrease,and his demand curve will shift straight down.
D)decrease,causing a movement down along his demand curve.

Question 74

The price of dog collars,a normal good,has gone down.This change can be shown graphically as:

A)a shift in the demand curve to the right.
B)a shift in the demand curve to the left.
C)a movement along the demand curve to the right.
D)a movement along the demand curve to the left.

Question 75

There has been a decrease in the demand for socks.This change can be shown graphically as:

A)a shift in the demand curve to the right.
B)a shift in the demand curve to the left.
C)a movement along the demand curve to the right.
D)a movement along the demand curve to the left.

Question 76

This graph depicts the demand for a normal good.
A movement from A to C in the graph shown might be caused by:

A)an increase in price.
B)a decrease in price.
C)an increase in income.
D)a decrease in income.

Question 77

An expectation of increased prices of a good in the future is likely to:

A)increase current demand.
B)decrease current demand.
C)have no impact on current demand.
D)only affect seller's decisions.

Question 78

Darren loves to go to the movies,and he just learned that he can buy a ticket at a discounted price if he shows his student ID.Darren now attends the movies even more often.Which of the following factors of demand caused the change in Darren's behavior?

A)Income
B)Price
C)Preferences
D)Number of buyers

Question 79

This graph depicts the demand for a normal good.
A movement from A to B in the graph shown might be caused by:

A)an increase in price.
B)a decrease in price.
C)an increase in income.
D)a decrease in income.

Question 80

The price of house paint,a normal good,has gone up.This change can be shown graphically as:

A)a shift in the demand curve to the right.
B)a shift in the demand curve to the left.
C)a movement along the demand curve to the right.
D)a movement along the demand curve to the left.