CH 3

Consider the market for iPads. What happens if a fantastic new alternative tablet is developed by Samsung and, at the same time, a boat carrying a large shipment of iPads is attacked by pirates and sunk?

The change in price is indeterminate and quantity decreases.

In much of the country, homeowners choose to heat their houses with either natural gas or heating oil, both of which are normal goods. Which factor would cause an increase in the demand for natural gas?

an increase in consumer incomes

A recent news story reported that the Organization of Petroleum Exporting Countries is expected to decrease the supply of oil next summer. Summer is traditionally a time of increased demand for oil because of vacation travel. What would be the combined effect of these two events on the summer market for gasoline?

an increase in the price and an unpredictable change in the quantity

If the price of mozzarella cheese (an ingredient in pizza) declines, there will be:

an increase in the supply of pizza.

Markets that are characterized by many buyers and many sellers are:

competitive

The law of demand states that, other things equal, as the price

increases, the quantity demanded will decrease.

Which two goods are most likely substitutes in consumption?

loaves of bread and hamburger buns

For consumers, pizza and hamburgers are substitutes. A rise in the price of a pizza causes a _____ in the equilibrium price of a hamburger and a(n) _____ in the equilibrium quantity of hamburgers.

rise; increase

The market price of airline flights increased recently. Some economists suggest that the price increased because jet fuel is much more expensive than before. As a result, they believe that, in the market for flights:

supply decreased.

You notice that the price of Blu-ray players falls and the quantity of Blu-ray players sold increases. You suspect that _____ Blu-ray players shifts to the _____.

supply of; right.

Suppose the equilibrium price of good X is $25 and the equilibrium quantity is 124 units. If the price of good X is $2:

there will be excess demand for good X.