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