MICRO CHAP 3

(Figure: Supply and Demand for Shoes) If the price of shoes is $20, then the market:

is experiencing a shortage of shoes.

A good is a normal good if:

the demand curve shifts outward if income increases.

The law of demand states that

the lower a product's price, the more of that product consumers will purchase during a given period.

(Figure: Market for Shoes) If the price of shoes is $40 per pair, the quantity demanded will be _____ pairs of shoes.

15

In the market for Chinese take-out, suppose that the price of Sushi take-out, a substitute, decreases in price. What will happen to the demand for Chinese take-out?

Demand for Chinese take-out will decrease.

Which factor would NOT cause the demand curve for green tea to shift to the right?

a decrease in the price of green tea

Table) In the table, at a price of $12:

a surplus of 20 units occurs

Which factor would shift the demand curve for gasoline to the right?

an increase in national income

Butter is a substitute for margarine. If the price of margarine drops, we would expect to see:

both the price of butter and quantity of butter fall.

(Figure: Interpreting Demand Curves) In the demand curve shown, an increase in price from $1 to $2 will:

cause quantity demanded to fall from 30 units to 20 units.

When a large factory closed in the town of Greenville, income fell for many residents. As a result, demand for normal goods would _____ and demand for inferior goods would _____.

decrease; increase

A decrease in demand causes the equilibrium price to _____ and the equilibrium quantity to _____

fall;fall

(Figure: Demand for Shoes) A shift to the right of the demand curve could be caused by a(n):

increase in income if the good is a normal good.

The supply curve represents the _____ price at which a firm is willing to _____.

minimum; sell various quantities of a good

There is a(n) _____ relationship between price and quantity demanded.

negative

If the demand for iPhones rises as incomes increase, then the iPhone is a(n) _____ good.

normal

Which enterprise is NOT an example of a market?

painting one's house

The law of supply states that as prices _____, the quantity _____.

rise; supplied rises

The graph represents the market for water park admissions. If the price of admission is set at $50, this would result in a _____ of _____ units

surplus; 200

A surplus exists:

when quantity supplied exceeds the quantity demanded.