CFA一级Preliminary Reading Demand and the Market Process参考.doc

五 Investment Tools: Economics: Microeconomic Analysis 1.A: Preliminary Reading: Supply, Demand, and the Market Process Question ID: 12637The law of demand states that, given a decrease in: A. price, demand will decrease B. price, demand will increase. C. real output, demand will increase. D. real output, demand will decrease. B The law of demand states that, given an increase in price, demand will decrease. This relationship exists because higher prices induce some consumers to purchase substitute goods and/or simply forgo the use of the product. Question ID: 12638The law of supply states that, given a decrease in: A. price, supply will increase. B. price, supply will decrease. C. real output, supply will increase. D. real output, supply will decrease. B The law of supply states that, given an increase in price, supply will increase and vice versa. This relationship exists because higher prices induce current producers to produce more units and new producers to enter the market. Question ID: 12672Given a shift to the right in the demand curve, which of the following identifies the short-run response and long-run response of price relative to beginning price? A. Short-Run Response of Price Long-Run Response of Price Decreases modestly Decreases substantially B. Short-Run Response of Price Long-Run Response of Price Increases substantially Increases modestly C. Short-Run Response of Price Long-Run Response of Price Decreases substantially Decreases modestly D. Short-Run Response of Price Long-Run Response of Price Increases modestly Increases substantially B Given a shift to the right in the demand curve, the price will rise substantially in the short run because there is a limit to how much production can be increased in the short run. However, after more plant and equipment are added (in the long-run), production can be increased significantly which reduces the imbalance between demand and supply. The