Micro Economics Quiz 3

Which of the following is NOT one of the factors that influences the supply of a product?

A) technology B) number of suppliers *C) income D) expected future prices

When income increases, the demand curve for X shifts rightward and the demand curve for Y shifts leftward. These shifts mean that

X is a normal good and Y is an inferior good

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

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 DVDs

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

At a price of $10 in the above figure, there is

a surplus of 400 units

Demands differ from wants because

demands reflect a decision about which wants to satisfy and a plan to buy the good, while wants are unlimited and involve no specific plan to acquire the good

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

falls

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

falls; decreases

Because of increasing marginal cost, most supply curves

have a positive slope

A normal good is a good for which demand

increases when income increases

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

If the price of a CD is equal to the equilibrium price, there will be ________ of CDs and the price will ________

neither a shortage nor surplus; not change

The quantity supplied of a good or service is the amount that

producers plan to sell during a given time period at a given price

A relative price is the

ratio of one money price to another

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

If the price of a hot dog is $2 and the price of a hamburger is $4, then the

relative price of a hot dog is 1/2 of a hamburger per hot dog

If the quantity of textbooks supplied is 10,000 per year and the quantity of textbooks demanded is 8,000 per year, there is a ________ in the market and the price will _______

surplus; fall

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 the good is expected to increase in the future

When a market is in equilibrium

there is no shortage and no surplus at the equilibrium price

Scarcity guarantees that

wants will exceed demands