Chapter 03 Test Bank KEY
1. An economy where private individuals guided by the invisible hand make decisions is known as a:
2. The term market refers to the:
3. The buyers and sellers who trade a particular good or service make up what we call a:
4. Which buyers and sellers are included in the market under consideration depends on:
5. The four important characteristics that define a perfectly competitive market are:
Topic: Market Economy
6. A perfectly competitive market is one in which:
7. A standardized good or service is one:
8. The best example of a standardized good would be:
9. Transaction costs can be defined as the costs:
10. 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:
Topic: Transactions Costs
11. We study the simple model of competitive markets because it helps to:
12. In economic terminology, a buyer or seller who cannot affect the market price is called a:
13. A price taker is a buyer or seller who:
14. The best example of a perfectly competitive market would be the market for:
15. The market for used cars is not considered perfectly competitive because:
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16. Perfectly competitive markets are:
17. Demand describes how much of something people:
18. 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:
19. For almost all goods, the:
20. The law of demand describes the:
21. The law of demand can be stated as all else equal:
22. Ceteris paribus is:
23. A nonprice determinant of demand refers to something that:
24. A demand schedule is a:
25. 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:
Topic: Demand
26. The demand schedule assumes that factors other than price:
27. A demand curve is a graph:
28. The demand curve:
29. The demand curve is:
30. When graphing the demand curve:
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31. The demand curve represents the relationship between:
32. Some nonprice determinants of demand are:
33. The “Made in the USA” campaign was popularized by unions in an effort to influence which
determinant of demand?
34. An article about how coffee boosts critical thinking is likely to affect which determinant of demand?
35. Jackie notices everyone wearing Converse sneakers on the first day of school. Ever the fashionista,
this will likely affect:
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Topic: Determinants of Demand
36. The most likely substitute good for hot dogs would be:
37. The most likely complementary good for hot dogs would be:
38. The most likely substitute good for cereal would be:
39. The most likely complementary good for cereal would be:
40. 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?
41. 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:
42. An increase in the price of butter is likely to cause the demand for:
43. An increase in the price of Heinz ketchup is likely to cause:
44. A decrease in the price of ice cream is likely to cause:
45. A decrease in the price of spaghetti noodles is likely to cause:
46. Demand for Snickers bars will decrease if:
47. We say that goods are substitutes when they:
48. We say that goods are complements when they:
49. John just won the Megamillions jackpot. We can assume that his demand for all:
50. Bob just got laid off and now has no income. We can assume that his demand for all:
51. After getting a raise at work, Jennie now regularly buys steak instead of hamburger. Based on this
behavior, we can assume:
52. 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:
53. 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?
54. 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:
55. 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:
56. An expectation of increased prices of a good in the future is likely to:
57. 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:
58. 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:
59. A change in a nonprice factor of demand will cause:
60. A decrease in the price of spaghetti is likely to cause:
61. An increase in the price of ice cream is likely to cause:
62. Demand for Shell gasoline will increase if the price of:
63. What happens to the demand curve when a nonprice determinant of demand changes?
64. There has been a decrease in the demand for socks. This change can be shown graphically as a:
65. There has been an increase in the demand for chicken. This change can be shown graphically as a:
66. The price of house paint, a normal good, has gone up. This change can be shown graphically as a:
67. The price of dog collars has gone down, and all other variables have remained constant. This change
can be shown graphically as a:
68. 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:
69. 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:
70. Which of the following would not affect an individual’s demand?
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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:
72. This graph depicts the demand for a normal good.
A movement from A to C in the graph shown might be caused by:
73. This graph depicts the demand for a normal good.
A shift from B to A in the graph shown might be caused by:
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74. This graph depicts the demand for a normal good.
A shift from A to B in the graph shown might be caused by:
75. 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:
76. The city of Burlington gets very hot each summer and very cold each winter. We would expect the
demand for lemonade to:
77. The city of Burlington is a very popular town for tourists to visit in the summer. We would expect the:
78. 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:
79. 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?
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. The change in Darren’s behavior
would be shown graphically by a:
81. Wendell just read an article that says scientists have proven that processed cheese food increases
brain power. We would expect Wendell’s demand for processed cheese food to:
82. Oliver just brought home a new kitten. We could expect Oliver’s demand for:
83. This table shows individual demand schedules for a market.
Price of Good
Barney’s Demand
Betty’s Demand
$0.00
20
$0.50
18
$1.00
16
$1.50
14
$2.00
12
$2.50
10
According to the table shown, at a price of $1.00, how much of the good will be demanded by Betty?
84. This table shows individual demand schedules for a market.
Price of Good
Barney’s Demand
Betty’s Demand
$0.00
20
$0.50
18
$1.00
16
$1.50
14
$2.00
12
$2.50
10
According to the table shown, if the price were $0.50, what will total demand by Betty and Barney be?