Econ 2 HW1
why does qty demanded decrease when price increases
-people choose to reduce consumption of the item -people "drop out" of the market for that item -people find substitutes for the item
what is likely to affect the position and shape of society's PPF
-volume of physical resources -level of labor skills -level of technology
example of efficient specialization and voluntary trade
a college professor hires someone to rototill a garden for spring planting
when a company advertises it is trying to cause
a rightward shift in the demand
basic economic principle
allocate resources to what gives you the highest value
demand for computers has risen and unit cost of production has decreased, we can expect
an increase in output with no predictable change in price
opportunity cost of going to college includes
both tuition and the value of the students time
shift in the supply curve of bicycles resulting from higher steel prices will lead to
higher price of bicycles
a shift in the demand curve for sailboats resulting from an increase in income will lead to
higher prices of sailboats
the price of a good rises and quantity purchased also rises, it is consistent that
income rose
total amount of consumption can be increased if
individuals engage in specialization and voluntary trade
if the consumer is sensitive to changes in the price of a good, the good's elasticity
is greater that -1
what happens to quantity of money demanded if the interest rate increases?
it decreases
if orange juice prices double next year
rightward shift in the demand for grapefruit juice (substitute good)
increase in population
shift demand curve to the right (D1 to D2)
increase in number of producers will shift
supply curve to the right (S1 and S2)
price of coal fell and quantity sold fell, it is consistent that
the price of oil fell
the slope of a demand curve is almost always
negative downward w/ everything else equal, people will buy more of a good if price is lower
quantity of newspapers sold will decline if
newsprint becomes more expensive