ECON 2305 HW #3
The price of a bag of corn chips is $3, and the price of a bottle of soda is $1. What is the relative price of a bag of corn chips?
3 bottles of soda
Which of the following increases the demand for a normal good?
The price of the good is expected to increase in the future.
Which of the following shifts the supply curve rightward?
a decrease in the price of a factor of production used to produce the good
Which of the following shifts the demand curve for oranges?
a decrease in the price of a pound of bananas, a substitute in consumption for oranges
The price of cereal rises. As a result, people have cereal for breakfast on fewer days and eat eggs instead. This behavior is an example of
a decrease in the quantity demanded of cereal because of the substitution effect.
When people's incomes increase, the demand for a good increases. The good is called
a normal good.
A price below the equilibrium price results in
a shortage.
If the quantity supplied exceeds the quantity demanded, then there is
a surplus and the price is above the equilibrium price.
In the market for magazines, the "income effect" means that
an increase in the price of magazines will reduce the total purchasing power of magazine readers, making them able to afford fewer magazines.
If consumers' incomes increase and the demand for bus rides decreases
bus rides are an inferior good.
The quantity demanded of a good or service is the amount that
consumers plan to buy during a given time period at a given price.
A recession occurs and people's incomes decrease. Knowing that an iPad is a normal good, you predict that the demand for an iPad
decreases.
If income increases or the price of a complement falls, the
demand curve for a normal good shifts rightward.
Demands differ from wants because
demands reflect a decision about which wants to satisfy and a plan to buy the good, while wants are unlimited and involve no specific plan to acquire the good.
If the demand for hamburgers decreases, the equilibrium price
falls and the equilibrium quantity decreases.
If a decrease in the price of gasoline increases the demand for large cars, then
gasoline and large cars are complements in consumption.
If the money price of wheat increases and no other prices change, the
opportunity cost of wheat rises.
In a supply and demand figure, the equilibrium price and quantity are found at the
point where quantity supplied equals quantity demanded.
The opportunity cost of good A in terms of good B is equal to the
ratio of the money price of good A to the money price of good B.
If the price of a candy bar is $1 and the price of a fast food meal is $5, then the
relative price of a fast food meal is 5 candy bars.
The opportunity cost of a good is the same as its
relative price.
By itself, an increase in the number of suppliers in a market results in a
rightward shift in the supply curve
There is a technological advance in the production of ice cream. As a result, the supply curve of ice cream shifts ________ and ________.
rightward; the equilibrium price falls while the equilibrium quantity increases
The law of demand states that, other things remaining the same, the higher the price of a good, the
smaller is the quantity of the good demanded.
The quantity supplied of a good is
the amount that the producers are planning to sell at a particular price during a given time period.
If the price of chicken falls, then in the market for beef,
the demand curve for beef shifts leftward.
Each point on the demand curve reflects
the highest price consumers are willing and able to pay for that particular unit of a good.
A bakery can produce either cakes or cookies. If the price of cookies rises, then
the supply curve of cake shifts leftward.
The "law of supply" refers to the fact that, all other things remaining the same, when the price of a good rises
there is a movement up along the supply curve to a larger quantity supplied.
Suppose that people find out that eating more fish improves their health, leading them to increase their demand for fish. As a result, the equilibrium price of fish ________ and the equilibrium quantity ________.
rises; increases