Lesson 3 Quiz over Chapter 3

Question 1

The demand curve shows the relationship between…

Answer 1

price and quantity demanded.

Question 2

When the price of a product increases, a consumer is able to buy less of it with a given money income. This describes the:

Answer 2

income effect.

Question 3

A recent study found that an increase in the federal tax on beer (and thus an increase in the price of beer) would increase the demand for marijuana. We can conclude that…

Answer 3

beer and marijuana are substitute goods.

Question 4

Which of the following is most likely to be an inferior good?

Answer 4

Used clothing.
An inferior good is defined as a “good in which the quantity demanded falls as income rises, and in which quantity demanded rises and income falls.

Question 5

Which of the following would most likely increase the demand for gasoline?

Answer 5

The expectation by consumers that gasoline prices will be higher in the future.

Question 6

A government subsidy to the producers of a product:

Answer 6

increases product supply.

Question 7

A market is in equilibrium:

Answer 7

if the amount producers want to sell is equal to the amount consumers want to buy.

Question 8

If we say that a price is too high to clear the market, we mean that:

Answer 8

quantity supplied exceeds quantity demanded.

Question 9

Which of the following will cause a decrease in market equilibrium price and an increase in equilibrium quantity?

Answer 9

An increase in supply.

Question 10

With a downsloping demand curve and an upsloping supply curve for a product, an increase in consumer income will:

Answer 10

increase equilibrium price and quantity if the product is a normal good.
A normal good is “a good in which the quantity demanded rises as income rises, and in which quantity demanded falls as income falls.