macro chapter 3 homework

change in demand

a shift of the demand curve, which changes the quantity demanded at any given price

an increase in the price of a DVD player

decreases the quantity of DVD players demanded and results in a movement up along the demand curve

The money price of a pound of bananas is ​$0.60 and the money price of a can of shave gel is ​$1.80. the opportunity cost of a can of shave gel is

3.00 pounds of bananas​, which is the relative price of a can of shave gel

William Gregg owned a mill in South Carolina. In December​ 1862, he placed a notice in the Edgehill Advertiser announcing his willingness to exchange cloth for food and other items. Here is an​ extract: 1 yard of cloth for 1 pound of bacon 2 yards of cloth for 1 pound of butter 4 yards of cloth for 1 pound of wool 8 yards of cloth for 1 bushel of salt

The relative price of 1 pound of bacon is .5 pounds of butter if the price of bacon is $0.20 a pound, you would predict that the price of a pound of wool is $0.8 if the money price of bacon was 20 cents a pound and the money price of salt was $2.00 a bushel, people would buy bacon ans trade it for cloth bc they could buy 8 yards of cloth for only​ $1.60, and use that cloth to obtain a bushel of salt

what is the distinction between money price and relative price?

The relative price of a gallon of gasoline in terms of a pound of bananas is​ the money price of a gallon of gasoline divided by the money price of a pound of bananas

change in supply

a shift of the supply curve, which changes the quantity supplied at any given price

law of supply

higher the price of a good, the greater is the quantity demanded

The market for pasta is a competitive market​

if many people buy and many firms sell pasta, so no single buyer or sellers can influence the price

change in quantity demanded

movement along the demand curve showing that a different quantity is purchased in response to a change in price

if as the price of a sports car increase, the quantity of sedans that firms plans to sell decreases, the sports cars and sedans are

substitutes

if as the price of a taxi ride increases, the quantity o bus rides that people buy increases, then taxi rides and bus rides are

substitutes

change in quantity supplied

the change in amount offered for sale in response to a change in price

law of demand

the higher the the price, the smaller the quantity demanded

equilibrium price

the price at which the quantity of a good demanded in a given time period equals the quantity supplied

The demand for DVD players does not change when a change in​

the price of a DVD player occurs

equilibrium quantity

the quantity bought and sold at the equilibrium price

demand

the relationship between the quantity demanded and the price of a good

supply

the relationship between the quantity supplied and the price of a good

The money price of a pound of bananas is ​$0.60 and the money price of a can of shave gel is ​$1.80. the relative price of a can of shave gel is an opportunity cost because​ ______.

the relative price tells us how many pounds of bananas we must give up to get a can of shave gel

substitutes

two goods for which an increase in the price of one leads to an increase in the demand for the other

compliments

two goods that are bought and used together