Econ ch. 3

An increase in demand is shown graphically by

a shift of the demand curve to the right.

The money price of a good is also known as its

absolute price

Another name for a surplus is

excess quantity supplied

Which of the following statements is correct?

A shortage occurs when the quantity demanded is greater than the quantity supplied at a price below the market clearing price.

Which of the following statements is FALSE?

An increase in income causes the demand curve for an inferior good to shift to the right.

Suppose Good A is a normal good. Which of the following will increase the demand for Good A?

An increase in the price of its substitutes

Which of the following situations could generate a shortage?

Demand for a good increases, but the price is not permitted to rise.

Mary decreases her consumption of Good X after the price of Good Y decreased. For Mary

Good X and Good Y are substitutes.

Suppose the price of cement goes up in the United States. What happens in the market for new homes?

Supply shifts upward and to the left.

Which of the following causes a movement along a supply curve?

a change in the price.

The alternative quantities demanded for a given time period at different possible prices is known as

a demand schedule.

When the price of a good falls, there will be

a movement along the good's demand curve.

Which of the following will cause the demand curve for beer to shift right?

a successful advertising campaign linking beer consumption to lower cholesterol

If there is a shortage in a free market, then

consumers will offer to pay a higher price for the good, and the price will rise toward the equilibrium level

Demand applies to which of the following?

fast food, labor market, criminal activity

If more foreign auto plants relocate to the United States, we would expect

the U.S supply curve automobiles to shift to the right.

The price of first- class stamp in 1957 was 3 cents, and it is 49 cents in 2014. From this we know that

the money price of first- class stamps increased from 1957 to 2014, but we can't tell if the relative price of first- class stamps increased or decreased without more information.

Other things being constant, the only way to move along a given supply curve for a product is for

the product's relative price to change.

A market demand schedule for a product indicates that

there is negative relationship between price and quantity demanded.

When the price of a complement (cream) decreases, the demand for the related good (coffee)

will shift outward

A demand schedule

is only for a given time period.

The law of demand

is supported by observations of human behavior in the marketplace.

A shortage will occur at a price at which

quantity demanded exceeds quantity supplied.

When there is an excess quantity supplied

quantity demanded is less than quantity supplied.

After the price of smartphone apps falls, Justin buys fewer flash drives but he buys a new smartphone. For Justin

smartphone apps and flash drives are substitutes, and smartphone apps and smartphones are complements

When income rises

demand for a normal good rises.

The price of a new textbook increased by 25% and the price of a used textbook increased by 30%. What happened to the relative price of the new textbook?

It decreased, but we can't tell by how much without more information.

Each of the following would cause an increase in the supply of baseballs EXCEPT

an expectation that the price of baseballs will rise in the future.

The law of demand states that

at lower relative prices, a larger quantity of a good will be purchased than at higher relative prices.

The quantity supplied of a particular good is the amount of the good that

firms are willing to sell at each price during a particular price during time period.

The market supply curve can be derived by

horizontally adding the individual supplies at each price level.

If a good is a normal good, an increase in income will

increase the demand for the good.