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Refer to the graph above. The law of demand is best represented by curve:
A)A.
B)B.
C)C.
D)D.
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If the price of beef falls and the price of chicken doesn't change, individuals will:
A)consume more of both chicken and beef.
B)consume less of both chicken and beef.
C)substitute chicken for beef.
D)substitute beef for chicken.
3

Which of the following will not cause the demand for college textbooks to change?
A)A change in income.
B)A change in the number of students enrolled in college courses.
C)A change in the number of textbooks required per course.
D)A change in the price of textbooks.
4

Suppose when you are offered $5.00 per hour to work in the campus library, you choose not to work, but when you are offered $8.00 per hour, you accept a part-time position. Your behavior can best be explained by the:
A)law of demand.
B)law of supply.
C)law of increasing marginal cost.
D)principle of comparative advantage.
5

Which of the following circumstances would most likely cause an increase in the current supply of milk?
A)A decrease in the cost of transporting milk.
B)A decrease in the number of dairy farmers of a given size.
C)An increase in the price of milk.
D)An increase in demand for milk.
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Suppose excess supply causes price to fall. As price falls:
A)the quantity demanded and supplied will fall.
B)the quantity demanded and supplied will rise.
C)the quantity demanded will rise and the quantity supplied will fall.
D)the quantity demanded will fall and the quantity supplied will rise.
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Refer to the graph above. There is a market surplus of 2000 units when the price is:
A)$1.20.
B)$.90.
C)$.60.
D)$.30.
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If supply and demand both shift to the left, equilibrium quantity:
A)rises, but the equilibrium price may rise, fall, or stay the same.
B)falls, but the equilibrium price may rise, fall, or stay the same.
C)may rise, fall, or stay the same, but equilibrium price will rise.
D)may rise, fall, or stay the same, but equilibrium price will fall.
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Honey and jam are substitute products. If the price of honey decreases:
A)the demand for honey will increase.
B)the demand for honey will decrease.
C)the demand for jam will increase, causing the price of jam to increase as well.
D)the demand for jam will decrease, causing the price of jam to fall.
10

The fallacy of composition refers to the false assumption:
A)that what is false for a whole will also be false for the part.
B)that what is true for a part will also be true for the whole.
C)that other things can be held constant in supply and demand analysis.
D)that other things cannot be held constant in supply and demand analysis.