CH3 Supply & Demand

As income increases, the demand curve for an inferior good shifts to the left.

True

An increase in consumer preference for a good shifts the demand curve to the left.

False

If the price of a resource required to produce a good increases, the supply curve will shift to the right, indicating that producers are inclined to produce more of the good at each price point.

False

An increase in government subsidies for an industry, which reduces production cost, causes the market equilibrium price to _____ and the market equilibrium quantity to _____.

decrease; increase

The supply and demand model assists in analyzing the:

determinants of market price and quantity.

Assume that hamburgers and ketchup are complements. If the price of hamburgers falls, demand for ketchup:

increases.

When the market for a good is in equilibrium, there is (are):

no shortages or surpluses.

A change in the quantity demanded of a good results from a change in the:

price of a good.

Assume a farmer's land is equally productive in growing corn or potatoes and is currently producing both. If the price of corn increases but the price of potatoes does not change, the farm's supply curve for potatoes will:

shift to the left, and fewer potatoes will be produced at each price level.

Improvements in technology that reduce production costs cause the _____ curve to shift to the _____, indicating a(n) _____ in the amount _____ at each price point.

supply; right; increase; supplied