Deck 3: Markets

Question 1

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

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

Answer 1

A

Question 2

The amount of a particular good or service 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.

Answer 2

A

Question 3

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.

Answer 3

A

Question 4

A price taker is a buyer or seller who:

A) cannot affect the market price.
B) takes the market price and chooses to increase or decrease it.
C) takes prices in the area and averages them together to set the price for his/her good.
D) can affect the market price, but only when collaborating with other buyers or sellers.

Question 5

An economy where private individuals 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 6

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 higher demand is.
D) higher the price goes, the higher the quantity demanded.

Question 7

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.

Question 8

The term market refers to the:

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

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) negotiators.

Question 10

The four important characteristics that define a perfectly 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 11

We study the simple model of competitive markets because it helps to:

A) provide useful insights to markets that are not perfectly competitive.
B) show how the government controls the economy.
C) indicate whether buyers or sellers matter more.
D) show how poorly the economy actually functions.

Question 12

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

A) there is complete information.
B) the buyers are not price takers.
C) the good is standardized.
D) there are always very low transaction costs.

Question 13

Which buyers and sellers are included in the market under consideration depends on:

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

Question 14

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.

Question 15

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 16

Transaction costs can be defined as the costs:

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

Question 17

Perfectly competitive markets are:

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

Question 18

The best example of a standardized good would be:

A) corn.
B) a handbag.
C) an autographed baseball.
D) breakfast cereal

Question 19

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 20

Demand describes how much of something people:

A) are willing and able to buy at alternative prices 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) be able to buy, but might not want to buy under certain circumstances.

Question 21

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 22

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 23

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 24

A nonprice determinant of demand refers to something that:

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

Question 25

The law of demand can be stated as all else equal:

A) quantity demanded rises as price falls.
B) quantity demanded rises as price rises.
C) quantity demanded rises as income rises.
D) demand rises as price falls.

Question 26

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) demand figure.
C) demand curve.
D) demand graph.

Question 27

The demand schedule assumes that factors other than price:

A) remain the same.
B) must also be in the table.
C) remain separate in the table.
D) change as price changes.

Question 28

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 29

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 30

The demand curve is:

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

Question 31

The most likely complementary good for cereal would be:

A) a bagel.
B) milk.
C) pizza.
D) a sub sandwich.

Question 32

Ceteris paribus is:

A) the Latin term for "all other things being the same."
B) only necessary for the definition of the law of demand.
C) often used by economists to isolate the effect of a multiple changes that are important.
D) the Latin term for "as things change only consider these changes".

Question 33

The most likely complementary good for hot dogs would be:

A) ketchup.
B) burgers.
C) tacos.
D) pizza.

Question 34

The demand curve:

A) represents consumers' willingness but not ability to buy.
B) shows the highest amount consumers will pay for a specific quantity.
C) visually displays the demand schedule.
D) represents consumers' ability but not willingness to buy.

Question 35

The most likely substitute good for cereal would be:

A) a bagel.
B) milk.
C) pizza.
D) a hot dog.

Question 36

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 37

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 38

A demand curve is a graph:

A) that visually displays the demand schedule.
B) depicting various price-quantity combinations of a good for a seller.
C) that shows the quantities demanded by consumers of a particular good or service at various incomes.
D) that shows the quantities demanded by consumers of a particular good or service at one price.

Question 39

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

Question 40

The most likely substitute good for hot dogs would be:

A) ketchup.
B) burgers.
C) potato chips.
D) a plate.

Question 41

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

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

Question 42

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 the demand for geriatric care to:

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

Question 43

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 44

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 45

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 46

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 47

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 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 for a good or service.

Question 48

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 49

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

A) olive oil to increase.
B) olive oilto decrease.
C) butter to increase.
D) butter to d.

Question 50

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 51

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 home-brewed coffee:

A) is a normal good, and Starbucks coffee is an inferior good for Paul.
B) and Starbucks coffee are normal goods for Paul.
C) will become a normal good for Paul over time.
D) is an inferior good, while Starbucks coffee is a normal good for Paul.

Question 52

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 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 for a good or service.

Question 53

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 (a substitute) decreases.
D) the price of Milky Way bars (a substitute) increases.

Question 54

A decrease in the price of spaghetti noodles 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 55

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 is due to a change in:

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

Question 56

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

A) a movement to the right along the demand curve for spaghetti.
B) an inward shift of the demand curve for spaghetti.
C) an outward shift of the demand curve for spaghetti.
D) a movement to the left along the demand curve for spaghetti.

Question 57

John just won the Megamillions jackpot.We can assume that his demand for all:

A) normal goods will increase.
B) inferior goods will increase.
C) normal goods will decrease.
D) normal goods will stay the same.

Question 58

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 59

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 for Jennie.
D) steak and hamburger are normal goods for Jennie.

Question 60

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

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

Question 61

Demand for Shell gasoline will increase if the price of:

A) Motor vehicles increases.
B) BP gasoline increases.
C) BP gasoline decreases.
D) Shell gasoline decreases.

Question 62

This graph depicts the demand for a normal good. A shift 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 63

Ray's company just announced that 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 64

The price of dog collars has gone down,and all other variables have remained constant.This change can be shown graphically as a:

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

Question 65

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

Question 66

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

Question 67

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

A) Prices of related goods
B) The individual's preferences
C) The individual's income
D) The costs of inputs

Question 68

This graph depicts the demand for a normal good. A shift 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 69

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

A) a movement to the left along the demand curve for ice cream.
B) an inward shift of the demand curve for ice cream.
C) an outward shift of the demand curve for ice cream.
D) a movement to the right along the demand curve for ice cream.

Question 70

This graph depicts the demand for a normal good. Suppose Johnny was consuming a normal good at point A in the figure shown,but has just received a raise at work.Johnny's demand may:

A)be unaffected.
B)increase to point B.
C)increase to point C.
D)drop to zero.

Question 71

This graph depicts the demand for a normal good. A shift from A to B in the graph shown for a normal good 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 72

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) increase, and his demand curve will shift to the right.
D) decrease, causing a movement down along his demand curve.

Question 73

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 with the demand curve.

Question 74

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

Question 76

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

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

Question 77

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

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

Question 78

The city of Burlington gets very hot each summer and very cold each winter.We would expect the demand for lemonade to:

A) increase constantly.
B) decrease each summer and increase each winter.
C) increase each summer and decrease each winter.
D) decrease constantly.

Question 79

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) shift to the right.

Question 80

Darren loves to go to the movies,and he just learned that he can buy a ticket at a discounted price using his student ID.Darren now attends 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