18) The terms of trade can take on any value A) below the seller\'s opportunity

Question

18) The terms of trade can take on any value A) below the seller's opportunity cost and above the buyer's opportunity cost. B) above the seller's opportunity cost. 6 C) below the seller's opportunity cost and below the buyer's opportunity cost. D) above the seller's opportunity cost and below the buyer's opportunity cost.

26) The demand schedule or curve for a product shows the relationship between how much of the product buyers are willing and able to buy and the A) cost of producing the product. B) time period, say, from one month to the next. C) product's price. D) buyers' incomes.

27) The law of demand states that, other things equal, A) the larger the number of buyers in a market, the lower the product price will be. B) consumers will buy more of a product at high prices than at low prices. C) price and quantity demanded are directly related. D) price and quantity demanded are inversely related.

28) As a result of a decrease in the price of online streaming movies, consumers download more movies online and buy fewer DVDs. This is an illustration of A) diminishing marginal utility. B) consumer sovereignty. C) the income effect. D) the substitution effect.

29) Steve went to his favorite hamburger restaurant with $3, expecting to buy a $2 hamburger and a $1 soda. When he arrived he discovered that hamburgers were on sale for $1 each, so Steve bought two hamburgers and a soda. Steve's response to the decrease in the price of hamburgers is best explained by A) the substitution effect. B) the price effect. C) a rightward shift in the demand curve for hamburgers. D) the income effect

Explanation / Answer

Question 18

D. The price must be greater than the opportunity cost of the seller and less than the opportunity cost of the buyer. The terms of trade should lie between the opportunity cost of the buyer and seller to be beneficial to both.

Question 26

C.The demand curve shows the relationship between the price of the product and quantity demanded at that price.

Question 27

D. Inverse relationship. If the price goes up, the quantity demanded falls. The demand curve is downward sloping.

Question 28

D. Substitution effect as DVDs and online streaming are substituties.

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