ch.3

a movement from one point on the supply curve to another point is

a change in quantity supplied

if a producer experiences an increase in the wage rate, it will lead to

a decrease in supply

a normal good is one for which

demand increases as income increases

mary increases her consumption of good X after the price of good Y decreased. for mary

good X and good Y are complements

which of the following causes a decrease in demand for a normal good?

increase in price of a complement

The price of a gallon of gasoline increased from $1.00 to $1.25 while the price of a ride on the city bus increased from 50 cents to 75 cents. The relative price of riding the city bus

increased from 0.5 to 0.6

an increase in quantity demanded of good A can be caused by

lower prices of good A

the absolute price of a good is its

money price

Pam graduates from law school and gets a position in a law firm. At the same time the price of hamburger falls while other food prices have stayed the same. She notices that she buys less hamburger than she did before. Is she violating the law of demand?

no, since other things are not held constant, including her income

according to the law of demand

people buy more of a good when the price falls

according to the law of supply

producers provide less of a good when the price decreases

equilibrium occurs when

quantity supplied and quantity demanded are equal at the market price

the "real" price of a good is known as

relative price of the good

a shift in demand occurs when

the amount demanded of that good changes at every price

an increase in price will lead to an increase in quantity supplied. this statement is

the law of supply

the law of demand includes the statement "other things being equal" these other things include all of the following except

the price of the good itself

the market clearing price is

the price which eliminates all excess supplies or excess demands

the meaning of demand is

the quantities of a good that people will buy at various prices

an increase in supply will occur when

the supply curve shifts downward to the right

surplus exists

when quantity supplied is greater than quantity demanded