Demand and Supply - Chapter 3

A simultaneous decrease in the demand and the supply of good X always leads to a decrease in the price of good X.

False

An increase in supply is graphically represented by a leftward shift of the supply curve

False

A deadweight loss is the loss to society of not producing the supply-and-demand determined level of output.

True

A surplus will occur in a market when the price of the product is above the equilibrium price.

True

In order for a price floor to have an impact on a market it must be set above the equilibrium price.

True

An advance in technology in the production of good X causes

a rightward shift in the supply curve for good X.

In the supply-and-demand diagram of the market for peanut butter, the equilibrium point has moved up and to the right. What could have caused this?

a shift in preferences toward peanut butter.

At a price above the equilibrium price, there is

a surplus.

If Max's demand for hot dogs falls as his income rises, then for Max hot dogs are

an inferior good.

As the price of good X rises, the demand for good Y falls. Therefore, goods X and Y are

complements.

If the price a buyer pays for a good is $50 and the maximum price she would be willing and able to pay is $53, then ____ is ___.

consumers surplus; $3

A price floor is a government mandated

minimum price below which legal trades cannot be made.

Economists state that the __ utility a person receives from a unit of a good, the __ the price he or she is willing to pay for it.

more; higher, less; lower

A price floor (set above the equilibrium price) on rice will

result in a surplus of rice

Suppose that for a given good demand increases and supply decreases at the same time. If demand increases by a lesser amount than supply decreases, then equilibrium price __ and equilibrium quantity __ for that good.

rises; falls

If people favor science fiction novels to a greater degree than previously, the demand curve for science fiction novels

shifts to the right