14) The demand for computers has risen dramatically at the same time that the un

Question

14) The demand for computers has risen dramatically at the same time that the unit cost of production has decreased. As a result, we can expect a. a decrease in price and no predictable impact on output b. a definite decrease in price and increase in output c. an increase in output with no predictable change in price. d. no predictable changes in either price or output 15) The slope of a demand curve is almost always positive, because when people buy more of a good the cost of producing it will nse. positive, because the more money a person has, the more of a particular good will be bought. negative, because when people buy more of a good the cost of producing it will fall. a. b. c. d. negative, because with everything else equal, the same people will buy more of a good when its price is lower. positive, because as the price rises, people want to sell more of the good. e. 16) Which of the following statements about scarcity is true? a. Scarcity refers to the situation in which unlimited wants exceed limited resources b. Scarcity is not a problem for the wealthy c. Scarcity is only a problem when a country has too large a population. scarcity only arises when there is a wide disparity in income distribution. 17) The United States typically experiences a large surplus of milk annually. This is caused by a. a price ceiling in the market. b. not enough demand for milk c. a price floor in the market. d. overproduction of milk by the cows. 18) An important assumption that is made when constructing a demand schedule is that a. only price and quantity matter in determining demand. b. people always want a certain amount of a product. c. demand is too important to be left to the economists. d. all other determinants of demand are held constant. e. demand has a positive slope.

Explanation / Answer

14. C

Explanation: The market development would push both the demand and supply curve towards the right. So, the quantity would definitely increase. However, the price can increase, decrease, or remain the same depending on the relative change in demand and supply.

15. D

Explanation: The law of demand states that everything else remaining same, the quantity demanded increases when the price falls and quantity demanded falls when price increases.

16. A

Explanation: Scarcity arises from the facts that our wants are unlimited and resources are limited.

17. C

Explanation: A binding price floor (price floor above equilibrium price) creates a surplus and a binding price ceiling (price ceiling below the equilibrium price) creates a shortage.

18. D

Explanation: When we determine the demand schedule, we study only the price and quantity demanded, keeping all else constant.

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