Econ chp3

Assume the demand curve for product X shifts to the right. This might be caused by

a decline in income if X is an inferior good.

Suppose that both supply and demand for DVD increase. One can predict that the

equilibrium quantity will rise but the equilibrium price can rise or fall.

Suppose the marginal cost of producing the third TV is $200 and the total cost of producing three TVs is $750. TV's are sold for $250 each. What is the seller's reservation price for the third TV?

$200

An increase in the quantity demanded means that

price has declined and consumers therefore want to purchase more of the product.

If we say that a price is too high to clear the market, we mean that

quantity supplied exceeds quantity demanded.

If the price of a product increases, we would expect

quantity supplied to increase.

The term "quantity demanded"

refers to the amount of a product that will be purchased at some specific price.

A government subsidy to the producers of a product

increases product supply.

Which of the following will cause a decrease in market equilibrium price and an increase in equilibrium quantity?

An increase in supply.

Which of the following demonstrate the law of demand?

Dave buys more donuts at $0.25 each than at $0.50 each.

Which of the following statements is true about price ceilings?

Price ceilings cause goods to be rationed by some other means than free market prices.

The demand curve for a product might shift as the result of a change in consumer tastes. consumer incomes. the prices of related goods. all of these.

all of these

"As the price of computers continue to fall, demand increases." This headline is inaccurate

because falling prices for computers increases quantity demanded, not demand.

If the demand for steak (a normal good) shifts to the left, the most likely reason is that

consumer incomes have fallen.

There will be a surplus of a product when

consumers want to buy less than producers offer for sale.

In the following question you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for, or supply (S) of, X; (2) the equilibrium price (P) of X; and (3) the equilibrium quantity (Q) of X. An increase in the prices of resources used to produce X will

decrease S, increase P, and decrease Q.

A binding price floor means that

government is imposing a minimum legal price that is above the equilibrium price.

In the following question you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for, or supply (S) of, X; (2) the equilibrium price (P) of X; and (3) the equilibrium quantity (Q) of X. An increase in the price of a product that is a close substitute for X will

increase D, increase P, and increase Q.

The upward slope of the supply curve reflects the

law of supply

The demand for most products varies directly with changes in consumer incomes. Such products are known as

normal goods

An improvement in production technology will

shift the supply curve to the right

Which one of the following determinants will cause movements along the supply curve of good X?

the price of good X

"Holding all other relevant factors constant, producers will supply more of a good as its price rises." This statement reflects the behavior underlying

the supply curve