 Show 93 3 DEMAND AND SUPPLY Markets and Prices Topic: Price and Opportunity Cost Skill: Conceptual 1) A relative price is A) the slope of the demand curve. B) the difference between one price and another. C) the slope of the supply curve. D) the ratio of one price to another. Answer: D Topic: Price and Opportunity Cost Skill: Conceptual 2) If the price of a candy bar is $1 and the price of a fast food meal is $5, A) the relative price of a candy bar is 5 fast food meals. B) the money price of a candy bar is 1/5 of a fast food meal. C) the relative price of a fast food meal is 5 candy bars. D) the money price of a fast food meal is 1/5 of a candy bar. Answer: C Topic: Price and Opportunity Cost Skill: Conceptual 3) If the price of a hot dog is $2 and the price of a hamburger is $4, A) the relative price of a hot dog is 1/2 of a ham- burger. B) the money price of a hot dog is 2 hamburgers. C) the relative price of a hamburger is 1/2 of a hot dog. D) the money price of a hamburger is 2 hot dogs. Answer: A Topic: Price and Opportunity Cost Skill: Analytical 4) The opportunity cost of good A in terms of good B is equal to the A) price of good A minus the price of good B. B) price of good B minus the price of good A. C) ratio of the price of good A to the price of good B. D) ratio of the price of good B to the price of good A. Answer: C Topic: Price and Opportunity Cost Skill: Analytical 5) The opportunity cost of a hot dog in terms of hamburgers is A) the ratio of the slope of the demand curve for hot dogs to the slope of the demand curve for hamburgers. B) the ratio of the slope of the supply curve for hot dogs to the slope of the supply curve for ham- burgers. C) the price of a hot dog minus the price of a ham- burger. D) the ratio of the price of a hot dog to the price of a hamburger. Answer: D Demand Topic: Demand Skill: Recognition 6) Wants, as opposed to demands, A) are the unlimited desires of the consumer B) are the goods the consumer plans to acquire. C) are the goods the consumer has acquired. D) depend on the price. Answer: A Chapter What does the market supply curve show?The market supply curve shows the quantity of a good that firms would offer for sale at different prices.
How does supply and demand work in a market economy?The law of demand says that at higher prices, buyers will demand less of an economic good. The law of supply says that at higher prices, sellers will supply more of an economic good. These two laws interact to determine the actual market prices and volume of goods that are traded on a market.
When there is a decrease in demand?A decrease in demand will cause the equilibrium price to fall; quantity supplied will decrease. An increase in supply, all other things unchanged, will cause the equilibrium price to fall; quantity demanded will increase. A decrease in supply will cause the equilibrium price to rise; quantity demanded will decrease.
When the price is below the equilibrium price the quantity demanded?If the price is below the equilibrium level, then the quantity demanded will exceed the quantity supplied. Excess demand or a shortage will exist. If the price is above the equilibrium level, then the quantity supplied will exceed the quantity demanded.
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The above figure represents the market for bicycles. when there is a physical fitness craze the
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