Macro HW 2

Juanita goes to the Hardware Emporium to buy a new circular saw. She is willing to pay $120 for a new saw, but buys one on sale for $85. Juanita's consumer surplus from the purchase is

$35

A positive technological change will cause the quantity supplied of a good to increase.

False

George subscribes to a monthly pest control service for his home. Last week, the owner of the service informed George that he will have to raise his monthly service fee because of increases in the price of gasoline used by his workers on their service trips. How is the market for pest control services affected by this?

There is a decrease in the supply of pest control services.

If a decrease in income leads to a decrease in the demand for ice cream, then ice cream is

a normal good

If, in response to a decrease in the price of coffee, the quantity of coffee demanded increases, then economists would describe this as

an increase in quantity demanded.

Which of the following will not shift the demand curve for a good?

an increase in the price of the good

In Venezuela, the government attempted to control rising food prices by implementing price ceilings in the market. These price ceilings were set ________ the market prices, which resulted in ________ of food.

below; shortages

The difference between the ________ for a good and the ________ is called consumer surplus.

highest price a consumer is willing to pay; price the consumer actually pays

The law of demand implies, holding everything else constant, that as the price of yogurt

increases, the quantity of yogurt demanded will decrease.

The substitution effect of a price change refers to

the change in quantity demanded that results from a change in price making a good more or less expensive relative to other goods that are substitutes

A demand curve shows the relationship between

the price of a product and the quantity of the product demanded.