ECON 252 Homework 2 Review Questions with Correct Answers
(Grade A+)
Question 1: In a perfectly competitive market, sellers _____________ and buyers _________________.
A. cannot charge more than the market price; are able to pay less than the market price
B. cannot charge more than the market price; cannot pay less than the market price
C. are able to charge more than the market price; cannot pay less than the market price
D. are able to charge more than the market price; are able to pay less than the market price
Answer: B. cannot charge more than the market price; cannot pay less than the market price
Question 2: In a perfectly competitive market, if one seller chooses to change a price for its good that is
slightly higher than the market price, then it will __________________.
A. lose all or most of all its customers
B. see no change in its number of customers
C. see a small decrease in its number of customers
D. all of the above are equally likely
Answer: A. lose all or most of all its customers
Question 3: The Law of Demand states that as the price of a good increases, the ___________________
decreases
Answer: quantity demanded
Question 4: How can the Law of Demand be shown graphically?
Answer: downward-sloping demand curve
Question 5: How can the Law of Demand be shown numerically?
Answer: demand schedule
Question 6: The relationship between the two variables of demand can be described as
_________________.
Answer: negative
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(Grade A+)
Question 1: In a perfectly competitive market, sellers _____________ and buyers _________________.
A. cannot charge more than the market price; are able to pay less than the market price
B. cannot charge more than the market price; cannot pay less than the market price
C. are able to charge more than the market price; cannot pay less than the market price
D. are able to charge more than the market price; are able to pay less than the market price
Answer: B. cannot charge more than the market price; cannot pay less than the market price
Question 2: In a perfectly competitive market, if one seller chooses to change a price for its good that is
slightly higher than the market price, then it will __________________.
A. lose all or most of all its customers
B. see no change in its number of customers
C. see a small decrease in its number of customers
D. all of the above are equally likely
Answer: A. lose all or most of all its customers
Question 3: The Law of Demand states that as the price of a good increases, the ___________________
decreases
Answer: quantity demanded
Question 4: How can the Law of Demand be shown graphically?
Answer: downward-sloping demand curve
Question 5: How can the Law of Demand be shown numerically?
Answer: demand schedule
Question 6: The relationship between the two variables of demand can be described as
_________________.
Answer: negative
Page 1
