Question 1

Demand and supply concepts can be used to explain prices:

Accepted Answer

A)  only in product markets, such as cars and houses. 
B)  only in government-regulated industries. 
C)  in all markets. 
D)  in labour and product markets, but not in money markets.

Question 2

When drawing a demand curve for cars, we keep which of the following constant?

Accepted Answer

A)  price expectations, incomes, and the price of cars 
B)  incomes, tastes, and the price of products that are substitutes for cars 
C)  incomes, the price of cars, and the price of products complementary to cars 
D)  incomes, tastes, and the price of cars

Question 3

If the demand for a product is inelastic and the price of the product increases, the total amount of money brought in from the sale of the product:

Accepted Answer

A)  increases. 
B)  decreases. 
C)  is impossible to tell without further information. 
D)  stays the same.

Exam 2: The Operation of a Market

Demand and supply concepts can be used to explain prices:

When drawing a demand curve for cars, we keep which of the following constant?

If the demand for a product is inelastic and the price of the product increases, the total amount of money brought in from the sale of the product: