Chapter 4: Demand, Supply, and Markets (Review)
As money income increases, consumers tend to substitute used furniture with new furniture. Used furniture is an example of a(n):
inferior good.
Other things remaining constant, a higher price for a good _____ that good.
makes producers more willing to increase the quantity supplied of
An increase in supply means that:
producers are willing to sell more at each price.
The law of supply states that:
the price and quantity supplied of a product are positively related.
When the price of wheat increases, _____.
the producers of bread will supply less bread at each price
When a market is in equilibrium, _____.
the quantity demanded is equal to the quantity supplied
Demand is the relationship between the price of a good and:
the quantity of the good consumers are willing and able to buy.
An increase in the equilibrium price and quantity in a market occurs when there is a:
rightward shift of the demand curve, given an upward-sloping supply curve.
A decrease in the equilibrium price and an increase in the equilibrium quantity occurs when there is a:
rightward shift of the supply curve, given a downward-sloping demand curve.
If the prices of all goods changed by the same percentage, _____.
there would be no substitution effect of the price changes of goods on the quantity demanded
According to the law of supply, _____.
the higher the price of a product, the greater the quantity supplied
The coordination that occurs through markets takes place not because of some central plan but because of _____.
the invisible hand
A summer in Miami turned out to be warmer than usual, causing people to consume more cola. This can be represented by:
a rightward shift of the demand curve for cola.
As personal income increases, consumers are willing and able to buy more of a good at each price. This causes:
a rightward shift of the demand curve.
Which of the following is true of the market demand curve for a good?
It is the sum of the individual demand curves of all consumers in the market.
Which of the following is the best example of transaction costs?
The amount of time a person spends looking for a house
Suppose the demand for and the supply of a good increases simultaneously. Which of the following is likely to be true in this case?
The equilibrium quantity increases, unequivocally.
According to the income effect, a drop in the price of a normal good:
increases the real income of consumers and they tend to buy more of the good.
A decrease in the price of cocoa will most likely lead to:
an increase in the supply of chocolate
