MICRO CHAPTER 3 QUIZ

Blank DVDs and prerecorded DVDs are substitutes in production. An increase in the price of a blank DVD will lead to

A decrease in the supply of prerecorded DVD

The price of cereal rises. As a result, people have cereal for breakfast on fewer days and eat eggs instead. This behavior is an example of

a decrease in the quantity demanded of cereal because of the substitution effect

normal goods

a good for which demand increases with an increase in consumer income

Which of the following results in a movement along the supply curve of spinach but does not shift the supply curve of spinach?

a rise in the price of spinach

When the demand for a good decreases, its equilibrium price _____ and equilibrium quantity

falls; decreases

The "law of supply" states that, other things remaining the same, firms produce

more of a good the higher its price

The "law of demand" is illustrated by a

movement along the demand curve

The opportunity cost of a hot dog in terms of hamburgers is the

ratio of the money price of a hot dog to the money price of a hamburger.

When the price of a pizza decreases from $14 to $12

the income effect points out that the total purchasing power of people who buy pizza increases.

which of the following increases the demand for a normal good

the price of a good is expected to increase in the future

relative price

the ratio of one price to another

Scarcity guarantees that

wants will exceed demands.

The price of a DVD rental is $1.50 and the price of a downloaded movie is $1.00. If the price of a DVD rental increases by $0.50, the relative price a downloaded movie

will rise