ECO 304K - Exam 1 Questions and
Verified Answers, 100- Score
Guarantee Pass (Latest 2025).
Perfectly competitive market - CORRECT ANSWERS - goods offered for sale are exactly the
same
- buyers and sellers are so numerous that no single buyer or seller has any influence over the market
price
Law of demand - CORRECT ANSWERS the claim that the quantity demanded of a good falls
when the price of the good rises.
Normal good - CORRECT ANSWERS a good for which an increase in income leads to an increase
in demand.
Inferior good - CORRECT ANSWERS a good for which an increase in income leads to a decrease
in demand.
Substitutes - CORRECT ANSWERS 2 goods for which an increase in the price of one leads to an
increase in the demand for the other.
Complements - CORRECT ANSWERS 2 goods for which an increase in the price of one leads to
a decrease in the demand for the other.
Shifts in the Demand Curve - CORRECT ANSWERS - Income increases: higher demand for
normal goods, less demand for inferior goods
- Substitutes: 1 good's demand decreases, the other good's demand increases
- Complements: 1 good's demand decreases, the other good's demand decreases
, - More buyers = more demand
Law of supply - CORRECT ANSWERS the claim that the quantity supplied of a good rises when
the price rises.
Shifts in the Supply Curve - CORRECT ANSWERS - Input prices: increase = less supply, decrease
= more supply
- Technology: improves = more supply
- More sellers = more supply
Surplus - CORRECT ANSWERS Supply > Demand
Shortage - CORRECT ANSWERS Supply < Demand
Law of supply and demand - CORRECT ANSWERS the claim that the price of any good adjusts
to bring the quantity supplied and the quantity demanded for that good into balance.
Shift in the curve: - CORRECT ANSWERS A change in supply or demand.
Movement along a curve: - CORRECT ANSWERS A change in the quantity supplied or quantity
demanded.
Price elasticity of demand - CORRECT ANSWERS a measure of how much the quantity
demanded of a good responds to change in the price of that good.
Determinants of price elasticity of demand: - CORRECT ANSWERS - Availability of Close
Substitutes: goods with close substitutes have more elastic demand.
- Necessities vs. Luxuries: necessities have inelastic demands, and luxuries have elastic demands.
Verified Answers, 100- Score
Guarantee Pass (Latest 2025).
Perfectly competitive market - CORRECT ANSWERS - goods offered for sale are exactly the
same
- buyers and sellers are so numerous that no single buyer or seller has any influence over the market
price
Law of demand - CORRECT ANSWERS the claim that the quantity demanded of a good falls
when the price of the good rises.
Normal good - CORRECT ANSWERS a good for which an increase in income leads to an increase
in demand.
Inferior good - CORRECT ANSWERS a good for which an increase in income leads to a decrease
in demand.
Substitutes - CORRECT ANSWERS 2 goods for which an increase in the price of one leads to an
increase in the demand for the other.
Complements - CORRECT ANSWERS 2 goods for which an increase in the price of one leads to
a decrease in the demand for the other.
Shifts in the Demand Curve - CORRECT ANSWERS - Income increases: higher demand for
normal goods, less demand for inferior goods
- Substitutes: 1 good's demand decreases, the other good's demand increases
- Complements: 1 good's demand decreases, the other good's demand decreases
, - More buyers = more demand
Law of supply - CORRECT ANSWERS the claim that the quantity supplied of a good rises when
the price rises.
Shifts in the Supply Curve - CORRECT ANSWERS - Input prices: increase = less supply, decrease
= more supply
- Technology: improves = more supply
- More sellers = more supply
Surplus - CORRECT ANSWERS Supply > Demand
Shortage - CORRECT ANSWERS Supply < Demand
Law of supply and demand - CORRECT ANSWERS the claim that the price of any good adjusts
to bring the quantity supplied and the quantity demanded for that good into balance.
Shift in the curve: - CORRECT ANSWERS A change in supply or demand.
Movement along a curve: - CORRECT ANSWERS A change in the quantity supplied or quantity
demanded.
Price elasticity of demand - CORRECT ANSWERS a measure of how much the quantity
demanded of a good responds to change in the price of that good.
Determinants of price elasticity of demand: - CORRECT ANSWERS - Availability of Close
Substitutes: goods with close substitutes have more elastic demand.
- Necessities vs. Luxuries: necessities have inelastic demands, and luxuries have elastic demands.
