Chapter 3

a printer is a normal good ->if income is expected to increase next year, you predict that the demand for printers-- now

will increase

what will change the demand for a gym membership

a change in population; a change in the expected future of a gym membership; a change in the price of bottled water (a complement)

the equilibrium quantity

and equilibrium price are determined at the intersection of the supply curve and the demand curve

cell phone and phone call

complements

if the price of beef increases, the quantity of leather that firms plan to sell increases, then beef and leather are

complements in production

ski trips and ski jackets are complements. if the price of a ski trip increases, the demand for ski jackets will --

decrease, and the demand curve for ski jackets will shift leftward

an increase in the price of a gym membership

decreases the quantity of gym memberships demanded and results in a movement up along the demand curve for a gym membership

when a surplus arises, the price-- to its equilibrium which--

falls; increases the quantity demanded and decreases the quantity supplied

a supply curve

is a minimum-supply-price curve

A demand curve

is a willingness-and-ability-to pay curve

the substitution effect influences gasoline purchases because when the price of a gallon of gasoline rises, other things remaining the same,--. Consumers--.

its relative price rises, look for alternative means of transportation

an increase in the demand for rice together with an increase in the supply of rice-- create a surplus or a shortage of rice at the original price. --> the price of rice --

might; might fall, rise, or not change

when a shortage arises, the price-to its equilibrium, which--

rises; decreases the quantity demanded and increases the quantity supplied

a demand curve that illustrates the law of demand

show the quantity demanded increases as the price falls

the supply curve that illustrates the law of supply

shows the quantity supplied increases as the price rises

coal and oil are

substitutes

if the price of a meal at taco bell decreases, the quantity of meals at Pizza Hut that people buy decreases then, meals at Taco Bell and meals at Pizza Hut are

substitutes

the relative price of a gallon of gasoline in terms of a pound of banana is

the money price of a gallon of gas divided by the money price of a pound of bananas

the money price of a textbook is $90 and the money price of a Wii game is $45 --> The opportunity cost of a textbook in terms if Wii games is -->The relative price of a Wii game in terms of textbooks

the number of Wii games you must give up to get the textbook; 0.5

the income effect influences gasoline purchases when the price of gasoline rises, other things remaining the same, --. Consumers--.

the price of gasoline rises relative to income; cannot afford to buy all the things they previously bought, so they buy less gasoline

The price of gasoline has increased during the past year -> The law of demand applies to gasoline because when the price of gasoline rises

the quantity of demanded decreases