Economy

Correct answer: D

I is incorrect: Price at which planned demand equals planned supply → Market equilibrium. There is no excess demand or supply at that price. II is correct: An effective maximum price below equilibrium → Binding price ceiling. It can create excess demand in a simple competitive model.

Correct answer: B

At that price sellers want to sell more than buyers purchase.

Correct answer: A

I is correct: Demand responding weakly to a percentage price change → Inelastic demand. The absolute price elasticity is below one. II is correct: Higher income reducing demand for an inferior good → Leftward demand shift. Demand for an inferior good falls as income rises.

Correct answer: D

Economic choice involves forgone alternatives.

Correct answer: A

I is correct: Additional satisfaction from one more unit → Marginal utility. Marginal concepts refer to an incremental change. II is correct: A price rise reducing quantity demanded, other things equal → Movement along a demand curve. The good's own price changes quantity demanded on the same curve.

Correct answer: B

I is incorrect: An effective minimum price above equilibrium → Binding price floor. It can create excess supply in a simple competitive model. II is correct: Tea and coffee used in place of one another → Substitute goods. A rise in one price can raise demand for the other.

Correct answer: D

A rise in one price can reduce demand for the other.

Correct answer: C

I is correct: Demand responding weakly to a percentage price change → Inelastic demand. The absolute price elasticity is below one. II is correct: Higher income increasing demand for a normal good → Rightward demand shift. At each given price consumers demand more.

Correct answer: A

I is incorrect: Additional satisfaction from one more unit → Marginal utility. Marginal concepts refer to an incremental change. II is correct: Quantity supplied exceeding quantity demanded → Market surplus. At that price sellers want to sell more than buyers purchase.

Correct answer: B

It can create excess demand in a simple competitive model.

Correct answer: A

I is correct: Price at which planned demand equals planned supply → Market equilibrium. There is no excess demand or supply at that price. II is correct: Tea and coffee used in place of one another → Substitute goods. A rise in one price can raise demand for the other.

Correct answer: B

The good's own price changes quantity demanded on the same curve.

Correct answer: A

I is incorrect: An effective maximum price below equilibrium → Binding price ceiling. It can create excess demand in a simple competitive model. II is correct: Higher income increasing demand for a normal good → Rightward demand shift. At each given price consumers demand more.

Correct answer: D

The absolute price elasticity exceeds one.

Correct answer: D

I is correct: Quantity supplied exceeding quantity demanded → Market surplus. At that price sellers want to sell more than buyers purchase. II is correct: Quantity demanded exceeding quantity supplied → Market shortage. At that price buyers want more than sellers offer.

Correct answer: C

I is incorrect: An effective maximum price below equilibrium → Binding price ceiling. It can create excess demand in a simple competitive model. II is correct: Additional satisfaction from one more unit → Marginal utility. Marginal concepts refer to an incremental change.

Correct answer: D

Demand for an inferior good falls as income rises.

Correct answer: A

I is correct: An effective maximum price below equilibrium → Binding price ceiling. It can create excess demand in a simple competitive model. II is correct: Tea and coffee used in place of one another → Substitute goods. A rise in one price can raise demand for the other.

Correct answer: B

There is no excess demand or supply at that price.

Correct answer: C

I is correct: Higher income reducing demand for an inferior good → Leftward demand shift. Demand for an inferior good falls as income rises. II is correct: Quantity supplied exceeding quantity demanded → Market surplus. At that price sellers want to sell more than buyers purchase.

Correct answer: A

The absolute price elasticity is below one.

Correct answer: B

I is incorrect: Demand responding weakly to a percentage price change → Inelastic demand. The absolute price elasticity is below one. II is correct: Cars and fuel used together → Complementary goods. A rise in one price can reduce demand for the other.

Correct answer: C

I is incorrect: Higher income reducing demand for an inferior good → Leftward demand shift. Demand for an inferior good falls as income rises. II is correct: Demand responding strongly to a percentage price change → Elastic demand. The absolute price elasticity exceeds one.

Correct answer: C

It can create excess supply in a simple competitive model.

Correct answer: A

I is incorrect: Demand responding strongly to a percentage price change → Elastic demand. The absolute price elasticity exceeds one. II is correct: Quantity demanded exceeding quantity supplied → Market shortage. At that price buyers want more than sellers offer.