1.

If an economist says “the higher the price of oranges, the fewer oranges individuals will buy, ceteris paribus, ” this means that:

 

A.individuals don’t like high-priced oranges.

 

B.as the price of oranges rises, individuals’ preferences change and they no longer like oranges as much as they once did.

 

C.as the price of oranges rises, individuals’ preferences do not change, nor does anything else, but individuals buy fewer oranges in response to the higher price of oranges.

 

D.the higher the price of oranges, the fewer oranges individuals will buy, assuming that people have economic motives.

 

2.

 

Labor is a resource that is necessary to produce many goods. “If the price of labor falls,” says the economist, “the price of goods will soon follow.” How does this work?

 

A.If the price of labor falls, the supply of goods rises, and the prices of those goods fall.

 

B.If the price of labor falls, the quantity supplied of goods rises, and the prices of those goods fall.

 

C.If the price of labor falls, the demand for goods falls, and the prices of those goods fall.

 

D.If the price of labor falls, the demand for goods rises, and the prices of those goods fall.

 

3.

 

An economist says, “Technological advances have the power to lower the prices of many of the goods we buy.” Here is how this works:

 

A.technological advances lead to lower demand, which leads to lower prices.

 

B.technological advances lead to greater supply, which leads to lower prices.

 

C.technological advances lead to greater quantity supplied, which leads to lower prices.

 

D.technological advances lead to lower taxes, which lead to greater supply, which leads to lower prices.