1. What is the main purpose of the model of supply and demand? (2 points)

1. What is the labor theory of value, and why do economists today generally consider it to be flawed?(4 points)

1. What is the main economic reason given in this chapter why demand curves slope downward?(2 points)

1. Explain the economic reason why most students will learn more knowledge if they study every day for 1 hour instead of once a week for 7 hours.(4 points)

1. When you buy something, what you are really giving up to purchase it is your time.For example, the Chipotle bowl I enjoy costs about $8, but I always tip a dollar to show a little love for those minimum-wage Chipotle workers.So I pay $9 for a bowl.As an economist I make about $50 per hour.To calculate how long I had to work for that bowl, you take the price/wage * 60 minutes.So in this case that is $9/$50 * 60 minutes.This means I had to work about 11 minutes for that tasty Chipotle feast.Think about the last product you purchased.Tell me what it was and the price you paid.Then tell me what your current wage is.If you aren't working or don't want to share this information, assume your wage is $12.00 per hour.Calculate how long you had to work for the last product you purchased.(4 points)

1. Give me a two-sentence reaction to the calculation you made in the previous question.Did your result surprise you?Did you think this is a good deal, or a lot more expensive than you thought?Tell me something about how your answer to question 5 made you reflect on the true cost you paid for that item. (2 points)

____ 1. The law of demand states that there is a tendency for

a.

Quantity demanded to be higher when price is higher.

b.

Quantity demanded to be higher when price is lower.

c.

Quantity demanded to be lower when price is lower.

d.

Quantity demanded to not respond when price changes.

____ 3. The main purpose of the model of supply and demand is to explain

a.

Supply.

b.

Demand.

c.

Prices.

d.

Quantities.

____ 4. What will happen in the soup market if our economy goes into a recession and incomes fall, assuming soup is an inferior good?

a.

The demand for soup will rise.

b.

Demand for soup will fall.

c.

The supply of soup will rise.

d.

The supply of soup will fall.

____ 5. The following table contains a supply schedule for a good.

Price

Quantity Supplied

$10

100

$20

Q1

If the law of supply applies to this good, then Q1 could be

a.

25

b.

50.

c.

100.

d.

125.

____ 7. When you buy a smartphone, that phone becomes more valuable to you as more people also get smartphones.What do economists call this phenomenon?

a.

Network effects.

b.

Congestion effects.

c.

The Law of Demand.

d.

The Ceteris Paribus phenomenon.

____ 8. According to Stevenson and Wolfers, which company benefits when our economy goes into a recession?

a.

Walmart, because they sell normal goods.

b.

Target, because they sell normal goods.

c.

Target, because they sell inferior goods.

d.

Walmart, because they sell inferior goods.

____ 9. In every chapter of your textbook, there is a summary of the entire chapter.You can find this summary in Achieve by clicking on what link?

a.

The Index.

b.

The Glossary.

c.

The Chapter Introduction.

d.

The Chapter at a Glance.

____ 10. The Rational Rule for buyers says that you should keep purchasing a product as long as

a.

The price is greater than the marginal cost.

b.

The price is less than the marginal cost.

c.

The price is greater than the marginal benefit.

d.

The price is less than the marginal benefit.