Answer the following statement(s) true (T) or false (F)
1. A market demand curve is a horizontal summation of individual demand curves.
2. A change in a good’s own price leads to shifts in the demand curve.
3. The acronym SPENT can help you remember the five important factors that shift the demand curve for a good or service.
4. Substitutes are generally goods for which one could be used in place of the other.
1. True
2. False
3. False
4. True
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An increase in first-period income results in
A) an increase in first-period consumption, an increase in second-period consumption, and an increase in saving. B) an increase in first-period consumption, a decrease in second-period consumption, and an increase in saving. C) a decrease in first-period consumption, an increase in second-period consumption, and an increase in saving. D) an increase in first-period consumption, an increase in second-period consumption, and a decrease in saving.
When gross investment is positive, net investment:
A. may be either positive or negative. B. must be positive. C. must be negative. D. is always zero.
Suppose that the value of the long-run absolute elasticity of demand for a good is one. Then, we know the short-run absolute price elasticity of demand will be
A. greater than one. B. less than one. C. infinity. D. elastic.
Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for mustard and that bratwurst and mustard are complements. What panel describes what happens in this market when the price of bratwurst falls?
A) Panel (a) B) Panel (b) C) Panel (c) D) Panel (d)