Completes the statement. ____ 1. Which statement is an example of an economic law?

____ 1. Which statement is an example of an economic law?

a) The speed limit is 55 miles per hour.

b) A triangle has 180 degrees.

c) People buy less at higher prices than at lower prices.

____ 2. Which statement is true?

a) Demand is more important then supply in determining prices.

b) The demand curve slopes upward to the right.

c) More items will be sold at a lower price than at a higher price.

d) Congress passed the law of demand.

____ 3. When demand for lumber (пиломатериалы) increases, so does demand for nails

(гвозди). When demand for lumber decreases, there is a decrease in demand for nails.

Economists would say lumber and nails are

a) unrelated goods.

b) substitute goods.

c) complementary goods (complements).

d) elastic goods.

____ 4. The fifth ice cream is less enjoyable than the first. This is an example of

a) opportunity cost.

b) the law of demand.

c) diminishing marginal utility.

d) scarcity.

____ 5. The law of supply states

a) buyers will purchase more at lower prices than at higher prices.

b) sellers will produce more at higher prices and less at lower prices.

c) quantities offered for sale do not depend on price.

d) consumers buy more at high prices and less at lower prices.

____ 6. What will happen in a competitive market if the quantity supplied is greater

than the quantity demanded?

a) consumers will demand more goods.

b) suppliers will increase their output of goods.

c) the market price will go down.

d) the market price will go up.

____ 7. The price of each of the following was reduced by 20 per cent. Which would be

likely to show the greatest increase in demand?

a) bread с) restaurant meals

b) milk d) eyeglasses

____ 8. All else remaining equal, an increase in demand will result in

a) a higher market price.

b) a lower market price

c) no change in price.

d) an increase in supply.

Ex. 17. Find the false sentences and correct them using the information from the text.

1. To make a sale you need three parties: buyers, sellers and producers.

2. The lower price, the greater the incentive to produce and sell the product.

3. If it costs sellers less to produce their products, they will be able to offer more of them for sale.

4. Improvements in technology tend to increase the cost of production.

5. There are few producers that can make more than one product.

6. Equilibrium price and quality is the point at which the quantity demanded exactly equals the quantity supplied in a market.

7. Shifts in demand and supply don’t affect market price.

8. When the market is cleared it means that there can be either surpluses, or shortages in the market.