Download ECON 202 – 2nd Quiz Key

ECON 202 – 2nd Quiz Key
1. The law of supply indicates that
producers will offer more of a product at high prices than they will at low prices.
2. According to the law of increasing opportunity costs
the slope of the supply curve is positive.
3. While intuitively it makes sense that a demand curve is downward sloping, the technical rationale for the
consumer’s inverse relationship between price and quantity demand is
the law of decreasing marginal benefits.
4. The law of demand implies that when people are asked to conserve water during a drought,
they will be more likely to cooperate if the rates charged for water rise.
5. A response to a price change would be described as a:
movement along an existing demand curve.
6. Assume that land suitable for growing corn is also suitable for growing soybeans. A decrease in the price of
corn will therefore:
reduce the cost of growing soybeans.
7. If prices are expected to rise in the future, today's market:
is affected by an increase in demand and a higher equilibrium price.
8. A decrease in supply would result from:
an increase in the prices of input resources.
9. Consider Miller Lite and Bud Light. If the price of Miller Lite falls, we may predict that:
the quantity demanded for Miller Lite will increase.
10. At $2 the shortage equals
200 units.
11. At $6 the surplus equals
200 units.
12. An important determinant of the amount of grains harvested next year by Ethiopian farmers is the amount of seeds
planted this year. Given that Western nations have guaranteed to donate five hundred tons of grain next year,
this year the Ethiopian farmers will:
plant less seeds as the price of grain will be lower with the food aid.
13. An increase in the price of chicken feed shifts the supply curve for eggs to the left and moves buyers along the
demand curve. In the jargon of economics, we have had a change in:
supply and a change in quantity demanded.
14. Suppose that both the price of gasoline and the amount of gasoline sold decline. Which of the following would
account for this?
A shift left of the demand curve, but no change in the supply curve
15. If shoe-repair services are an inferior good, then:
if people's incomes go up, they are less willing to buy shoe repair at the same prices.
16. Which of the following provides an example of complementary goods?
French fries and catsup
17. Suppose that there has been a decline in the price of pork. What effect will this have on the market for beef?
A decrease in demand