Chapter 3 Micro HW

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

consumer incomes have fallen.

A shift to the right in the demand curve for product A can be most reasonably explained by saying that:

consumer preferences have changed in favor of A so that they now want to buy more at each possible price.

An increase in the price of a product will reduce the amount of it purchased because:

consumers will substitute other products for the one whose price has risen.

Suppose an excise tax is imposed on product X. We expect this tax to:

decrease the demand for complementary good Y and increase the demand for substitute product Z.

A normal good is one:

for which the consumption varies directly with income.

When the price of a product increases, a consumer is able to buy less of it with a given money income. This describes the:

income effect.

A demand curve:

indicates the quantity demanded at each price in a series of prices.

When the price of a product rises, consumers with a given money income shift their purchases to other products whose prices are now relatively lower. This statement describes:

the substitution effect.

Tennis rackets and ballpoint pens are:

independent goods.

If the demand curve for product B shifts to the right as the price of product A declines, then:

A and B are complementary goods.

Which of the following will not cause the demand for product K to change?

A change in the price of product K.

Which of the following would not shift the demand curve for beef?

A reduction in the price of cattle feed.

Which of the following will cause the demand curve for product A to shift to the left?

An increase in money income if A is an inferior good.

Which of the following is most likely to be an inferior good?

Used clothing.

Other things equal, which of the following might shift the demand curve for gasoline to the left?

The development of a low-cost electric automobile.

When the price of Nike soccer balls fell, Ronaldo purchased more Nike soccer balls and fewer Adidas soccer balls. Which of the following best explains Ronaldo's decision to buy more Nike soccer balls?

The substitution effect.

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.

If two goods are complements:

a decrease in the price of one will increase the demand for the other.

Markets, viewed from the perspective of the supply and demand model:

assume many buyers and many sellers of a standardized product.

Economists use the term "demand" to refer to:

a schedule of various combinations of market prices and amounts/quantities demanded.

A recent study found that an increase in the federal tax on beer (and thus an increase in the price of beer) would reduce the demand for marijuana. We can conclude that:

beer and marijuana are complementary goods.

An economist for a bicycle company predicts that, other things equal, a rise in consumer incomes will increase the demand for bicycles. This prediction assumes that:

bicycles are normal goods.

In the past few years, the demand for donuts has greatly increased. This increase in demand might best be explained by:

change in buyer tastes.

Blu-ray players and Blu-ray discs are:

complementary goods.

Digital cameras and memory cards are:

complementary goods.

If X is a normal good, a rise in money income will shift the:

demand curve for X to the right.

If Z is an inferior good, an increase in money income will shift the:

demand curve for Z to the left.

If products A and B are complements and the price of B decreases, the:

demand for A will increase and the quantity of B demanded will increase.

The relationship between quantity supplied and price is _____ and the relationship between quantity demanded and price is _____.

direct; inverse

College students living off-campus frequently consume large amounts of ramen noodles and boxed macaroni and cheese. When they finish school and start careers, their consumption of both goods frequently declines. This suggests that ramen noodles and boxed macaroni and cheese are:

inferior goods.

A market:

is an institution that brings together buyers and sellers.

One reason that the quantity demanded of a good increases when its price falls is that the:

lower price increases the real incomes of buyers, enabling them to buy more.

If consumer incomes increase, the demand for product X:

may shift either to the right or left.

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

normal goods

An inferior good is:

not accurately defined by any of these statements.

The law of demand states that, other things equal:

price and quantity demanded are inversely related.

The demand curve shows the relationship between:

price and quantity demanded.

The construction of demand and supply curves assumes that the primary variable influencing decisions to produce and purchase goods is:

price.

Steve went to his favorite hamburger restaurant with $3, expecting to buy a $2 hamburger and a $1 soda. When he arrived he discovered that hamburgers were on sale for $1 each, so Steve bought two hamburgers and a soda. Steve's response to the decrease in the price of hamburgers is best explained by:

the income effect.

A decrease in the price of digital cameras will:

shift the demand curve for memory cards to the right.

If products C and D are close substitutes, an increase in the price of C will:

shift the demand curve of D to the right.

If the price of product L increases, the demand curve for close-substitute product J will:

shift to the right.

In 2007, the price of oil increased, which in turn caused the price of natural gas to rise. This can best be explained by saying that oil and natural gas are:

substitute goods and the higher price for oil increased the demand for natural gas.

The income and substitution effects account for:

the downward-sloping demand curve.

Graphically, the market demand curve is:

the horizontal sum of individual demand curves.

When the price of a product falls, the purchasing power of our money income rises and thus permits consumers to purchase more of the product. This statement describes:

the income effect.

In presenting the idea of a demand curve, economists presume the most important variable in determining the quantity demanded is:

the price of the product itself.

In constructing a demand curve for product X:

the prices of other goods are assumed constant.