Macroeconomics Test 2 Study Guide

The phrase "demand has increased" means that a demand curve has shifted to the left. B) there has been an upward movement along a demand curve. C) there has been a downward movement along a demand curve. D) a demand curve has shifted to the right.

A demand curve has shifted to the right

If a decrease in income leads to in a decrease in the demand for ice cream, then ice cream is A) a normal good. B) a neutral good. C) a complement. D) a necessity.

A normal good

If, in response to a decrease in the price of coffee, the quantity demanded of coffee increases, economists would describe this as A) an increase in demand. B) an increase in quantity demanded. C) a change in consumer income. D) an increase in consumersȇȱtaste for coffee.

An increase in quantity demanded

Holding everything else constant, a decrease in the price of GPS systems will result in A) a decrease in the quantity of GPS systems demanded. B) an increase in the demand for GPS systems. C) a decrease in the supply of GPS systems. D) an increase in the quantity of GPS systems demanded.

An increase in the quantity of GPS systems

If the price of pork rinds falls, the substitution effect due to the price change will cause A) an increase in the demand for pork rinds. B) an increase in the demand for corn chips, a substitute for pork rinds. C) an increase in the quantity of pork rinds demanded. D) a decrease in the quantity of pork rinds demanded.

An increase in the quantity of pork rinds demanded

The law of demand implies, holding everything else constant, that as the price of yogurt A) increases, the demand for yogurt will increase. B) increases, the quantity of yogurt demanded will decrease. C) decreases, the quantity of yogurt demanded will decrease. D) decreases, the demand for yogurt will increase.

Increases, the quanity of yogurt demanded will decrease

The substitution effect of a price change refers to A) the change in quantity demanded that results from a change in price making a good more or less expensive relative to other goods that are substitutes. B) the shift of a demand curve when the price of a substitute good changes. C) the movement along the demand curve due to a change in purchasing power brought about by the price change. D) the shift in the demand curve due to a change in purchasing power brought about by the price change.

The change in quantity demanded that results from a change in price making a good more or less expansive relative to other goods that are substitutes

A demand curve shows the relationship between A) the price of a product and the quantity of the product demanded. B) the amount of a product sellers are willing to sell at a particular price and the amount consumers are willing to buy at that price. C) the quantity that consumers are willing and able to buy and the quantity that sellers are willing and able to offer. D) the price of a produce and the demand for the product.

The price of a product and the quantity of the product demanded

In 2004, hurricanes destroyed a large portion of Florida's orange and grapefruit crops. In the market for citrus fruit,

The supply curve shifted to the left resulting in an increase in the equilibrium price.

An increase in the price of MP3 players will result in

a decrease in the quantity of MP3 players demanded.

Which of the following would cause both the equilibrium price and equilibrium quantity of cotton (assume that cotton is a normal good) to increase?

an increase in consumer income

An increase in the demand for lobster due to changes in consumer tastes, accompanied by a decrease in the supply of lobster as a result bad weather reducing the number of fishermen trapping lobster, will result in? A) a decrease in the equilibrium quantity of lobster and no change in the equilibrium price. B) an increase in the equilibrium price of lobster and no change in the equilibrium quantity. C) an increase in the equilibrium price of lobster; the equilibrium quantity may increase or decrease. D) a decrease in the equilibrium quantity of lobster; the equilibrium price may increase or decrease.

an increase in the equilibrium price of lobster; the equilibrium price may increase or decrease

Assume that both the demand curve and the supply curve for MP3 players shift to the right but the demand curve shifts more than the supply curve. As a result

both the equilibrium price and quantity of MP3 players will increase

The ________ effect of a price change refers to the impact of a change in the price of a good on a consumer's purchasing power.

income