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Economic Theory

b) the price of a good and the cost of producing that good;
c) the price of a good and the number of consumers who would
buy the good at that price;
d) the price of a good and its opportunity cost.

3. If a price increase of good A increases the quantity demanded of

good B, then good B is a:
a) substitute good;
b) complementary good;
c) bargain;

d) inferior good.

4. A demand curve can shift because of changing:

a) incomes;
b) prices of related goods;
c) tastes;
d) all of the above.

5. Which of the following is not a determinant of the supply of peanut
butter?

a) the price of peanut butter substitutes;
b) the wages of workers at the peanut factory;
c) the price of peanuts;
d) existing peanut butter-making technology.

Application Questions

1. Make up the text putting the jumbled paragraphs in order:

Part A Part B

1. Participation is motivated by a) are part of the market demand for
that product
2. All interactions in the b) the demand curve shift
marketplace involve
3. Although the actual c) the desire to maximize utility
exchanges can take place (consumers), profits (business firms), or
anywhere the general welfare (government agencies)

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