Econ 201 - LC3 - Chapter 3: Supply and Demand

Suppose that students at Big University buy season football tickets at the beginning of the fall semester. Everyone expects that the team will have a great season. Students sell individual tickets throughout the season in a competitive market. They can sell tickets to later games (more exciting match-ups) immediately or wait for the game day to approach. If they think the team will have a great season, what will happen in the market for Big University football tickets today?

The current supply will shift to the left.

If skim milk and cream are complements in production, when the price of skim milk increases, what happens in the market for cream?

The supply of cream increases.

If gasoline and heating oil are substitutes in production for an oil refiner, what happens in the market for heating oil when the price of gasoline increases?

The supply of heating oil decreases.

Suppose that the number of students enrolled at Big University decreases. In the local market for college textbooks, demand will:

decrease

If the price of e-books—a substitute for printed textbooks—decreases, the:

demand for printed textbooks will decrease.

True or False: If the quantity demanded is less than the quantity supplied there is a shortage. This is _____.

false

True or False: If two products are complements in production, a decrease in the price of one of the products will result in a decrease in the price of the other product. This is _____.

false

True or False: If two products are substitutes in production, an increase in the price of one of the products will result in an increase in supply of the other product. This is _____.

false

The downward slope of the demand curve shows that a(n):

increase in price causes a decrease in quantity demanded.

According to the law of demand as:

price increases, the quantity demanded decreases.

The supply curve has a positive slope because:

producers are willing to sell more at higher price.

The amount of a good that producers are willing to sell at some specific price is known as:

quantity supplied

Wii consoles and Wii video games are complements. If the price of Wii consoles decreases, the demand curve for Wii video games will:

shift to the right.

An increase in demand is indicated by:

shifting the entire demand curve to the right.

If the price of an input increases:

supply decreases and the equilibrium price increases.

A rightward shift of demand shows that:

the quantity demanded at any given price is greater than before.