Chapter 3 Homework
a normal good; an inferior good
A good for which demand increases as income rises is ________, and a good for which demand increases as income falls is ________.
ceteris paribus condition.
Economists refer to the necessity of holding all variables other than price constant in constructing a demand curve as the
substitutes; complements
Goods and services that can be used for the same purpose are ________, and goods and services that are used together are ________.
Z is a substitute for input X in the production of Y.
The law of demand holds in the market for three goods, X, Y, and Z. An increase in the price of X causes an increase in the price of Y. A decrease in the price of X causes a decrease in the demand for Z. Which of the following conclusions is most strongly supported by the information given above?
holding everything else constant, when the price of a good falls, the quantity demanded will increase, and when the price of a good rises, the quantity demanded will decrease.
What is the law of demand? The law of demand is:
The income effect; the substitution effect
________ is used to describe how changes in price affect a consumer's purchasing power, and ________ is used to describe how a change in price affects the quantity demanded of a good by making it more or less expensive than substitute goods.
When the price of a good increases, consumers' purchasing power decreases, and they cannot buy as much of the good as they did prior to the price change.
According to the law of demand LOADING... , there is an inverse relationship between price and quantity demanded. That is, the demand curve for goods and services slopes downward. Why?
there is an inverse relationship between price and quantity demanded.
According to the law of demand,
demand curve for nurses will shift to the right.
After World War II in 1945, the United States experienced a "baby boom" as birthrates rose and remained high through the early 1960s. In 2011, the first members of the baby boom generation became older than 65. What effect will this have on the market for nurses? As the first baby boomers become older than 65, the:
Which of the following illustrates the law of supply?
An increase in price causes an increase in the quantity supplied, and a decrease in price causes a decrease in the quantity supplied.
1) demand for McDonald's Big Mac hamburgers to increase. 2) a movement along the demand curve for McDonald's Big Mac hamburgers. 3) shift the demand for McDonald's Big Mac hamburgers to the left. 4) demand for McDonald's Big Mac hamburgers to shift to the rights to the right if they are inferior goods.
State whether each of the following events will result in a movement along the demand curve for McDonald's Big Mac hamburgers or whether it will cause the curve to shift. 1) The price of Burger King's Whopper hamburger increases. This will cause: 2) McDonald's distributes $1.00 off coupons. This will cause 3) KFC lowers the price of bucket fried chicken 4) The U.S. economy enters a period of decline in incomes. This will cause
According to the law of supply,
There is a positive relationship between price and quantity supplied. As the price of a product increases, firms will supply more of it to the market.
a change in the price of the good or service
Which of the following would not shift the demand curve for a good or service?
The distinction between substitutes and complements is
substitute goods are used for the same purposes while complementary goods are used together.
consumer income
variable that cause the demand curve to shift
The distinction between a normal and an inferior good is
when income increases, demand for a normal good increases while demand for an inferior good falls.