Chapter 3

MULTIPLE CHOICE 1. In economics, the demand for a good refers to the amount of the good people a.would like to have if the good were free.b.are willing to buy at various prices.c.need to achieve a minimum standard of living.d.will buy at alternative income levels. ANS B PTS 1 DIF E TOP Law of demand TYP RE 2. The law of demand is the principle that there is ____ relationship between the price of a good and the quantity buyers are willing to purchase in a defined time period, ceteris paribus. a.a directb.noc.an inversed.independent ANS C PTS 1 DIF E TOP Law of demand TYP RE 3. The law of demand refers to the a.inverse relationship between the price of a good and the willingness of consumers to buy it.b.price increase that results from an increase in demand for a good of limited supply.c.inverse relationship between the price of a good and the quantity offered for sale.d.increase in the quantity of a good available when its price increases. ANS A PTS 1 DIF M TOP Law of demand TYP RE 4. The law of demand indicates that a.every physical good has a use.b.when people want a good badly enough, they will find a way to pay for it.c.the desire for a good is unrelated to its price.d.the quantity of a good that people will buy is inversely related to the price of the good. ANS D PTS 1 DIF M TOP Law of demand TYP RE 5. The law of demand indicates that as the price of a good increases a.suppliers sell less of it.b.suppliers sell more of it.c.buyers buy less of it.d.buyers buy more of it. ANS C PTS 1 DIF E TOP Law of demand TYP RE 6. Consumers buy less of a good as its price increases because a.production costs have risen.b.substitute goods are now relatively cheaper.c.the income of consumers has effectively risen.d.the higher price will make the good more valuable to each consumer. ANS B PTS 1 DIF M TOP Law of demand TYP SA 7. A curve that is derived by summing horizontally individual demand curves is called a.aggregate supply.b.market supply.c.aggregate demand.d.market