Chapter 2 Self-test questions

A fall in the price of steel will cause the supply curve for motor vehicles to ____________.

become steeper.

become shallower.

shift to the right.

shift to the left.

An 'administered price' is one that is:

set by the government.

set by a supplier who then sees what quantity is demanded at that price.

set by a supplier who then negotiates with individual purchasers.

none of the options given are correct

Which of the following pairs of markets are linked?

Bus tickets and paving stones.

Public transport in London and Miami

Wheat in the European Union and in the USA.

None of the options given are correct

The price of crude oil is considered as flexible because ____________

There are multiple prices for the product

Buyers can refuse to pay at the price quoted

It is usually negotiable

They are always adjusting to ensure supply meets demand

None of the above

If the demand curve for eggs shifts to the right when the price of bacon rises, this would suggest that:

bacon and eggs are substitutes.

bacon and eggs are complements

either bacon or eggs is an inferior good.

consumers' tastes have changed

If fish and chips are complementary goods, a fall in the price of fish will:

shift the demand curve for chips to the right.

shift the demand curve for chips to the left.

make the demand curve for chips steeper.

shift the supply curve for chips to the right

Which of the following is not a reason for shops and supermarkets to mark down the prices of stock?

The products are approaching their 'sell by' dates.

The products have administered prices.

To make way for new lines or products.

To get rid of stock that has not sold well at the original price.

None of the above

Negative excess demand:

cannot exist.

occurs when price is below the equilibrium level.

means producers wish to sell less than consumers wish to buy

is the same thing as excess supply

None of the above

A common feature of the markets for many metals is that:

both demand and supply are fairly stable

they have fairly stable demand conditions but supply varies with the business cycle.

they have fairly stable supply conditions but demand varies with the business cycle.

both demand and supply vary with the business cycle

The law of demand suggests that ____________

Price and quantity demanded are positively related

Price and quantity demanded are inversely related.

Quantity demanded is equal to quantity supplied

Income falls as demand rises

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