Question

2 A newspaper reports that in an urban area the average price of new homes has decreased, but the number of new homes sold has increased. This situation would best be explained by a:

Select one:

a. decrease in demand (all else constant).

b. increase in supply (all else constant).

c. decrease in supply (all else constant).

d. increase in demand (all else constant).

Question 3

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3 You see online that GDP increased by 3%. This tells you that:

Select one:

a. the amount of government spending increased by 3%

b. the value of output produced within the country increased by 3%

c. The number of jobs in the economy increased by 3%

d. The prices of goods and services increased by 3%

Question 4

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4 When measuring the value of a good for the purposes of GDP, economists use:

Select one:

a. The amount of labor used to produce the good

b. The market price the good sold for

c. The amount of dollars the firms spent in making the good

d. The price of the good minus the cost of production

Question 5

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5 Which statement accurately expresses the law of supply?

Select one:

a. Holding all else the same, as price increases the quantity supplied decreases

b. Supply is limited because the factors of production are limited

c. Holding all else the same, as price increases the quantity supplied increases

d. Supply of a given good cannot exceed the demand for that good.

Question 6

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6 A good purchased by the end user of that good is called a final good.

Select one:

True

False

Answer 1

Answer.)

Q2.) b.) Increase in supply ( all else constant)

A rightward shift in supply curve holding all else constant would increase the quantity sold at even lower price level.

Q3.) b.) The value of output produced within the country increased by 3%

Q4.) D.) The price of the good minus the cost of production.

It's essential to reduce cost of production from final value of the good to avoid the possibility of double counting.

Q5.) C.) Holding all else the same, as price increases the quantity supplied increased

Since supply curve is upward sloping, it shows the positive relationships between price of the good and quantity supplied.

Q6.) True

Final user / final consumption is related with final good otherwise it would be counted as an intermediary good.