ECON 6001 Economic Principles Assignment

Q1.    Consider the following statements and decide which are true. Where relevant you should assume that the ceteris paribus assumptions hold true. Record the correct combination from the possibilities listed below the list of statements.

1. A market is any institutional entity that brings together potential buyers and sellers.
2. There is an inverse relationship between demand and price which is plotted on a demand curve.
3. Consumers demand a larger quantity of a good because with a fixed income they can afford to buy more when the price falls.
4. Consumers demand more of a good when the price of a complimentary good falls.
5. Inferior goods are goods whose consumption falls in a recession when disposable incomes fall.
6. A negative change in demand implies a move down the demand curve.
7. Complementary goods are those that are bundled free with other goods for promotional purposes.
8. An increase in the number of motorists is likely to shift the demand curve for petrol to the right.
9. When the price of a good rises and the demand for another decreases, the two goods are likely to be substitutes.
10. If the price of a good falls and the demand for another rises, the two goods are said to be substitutes.
11. Inferior goods are goods whose consumption falls in a boom when disposable incomes rise.
12. A change in demand occurs when a hairdresser raises the price of haircuts and the salon experiences a decline in the number of customers.
13. A shift to the left of a demand curve indicates that consumers would be willing to buy less at each and every price.
14. Expectations of a price rise will decrease the demand for a good.
15. Advertising usually leads to an increase in the quantity demanded of a good.

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