Unit 2 Woodshed Part 1

Which of the following is consistent with the law of demand?

A) An increase in the price of a soda causes a degree in the quantity of soda demanded. B) An increase in the price of a tape causes an increase in the quantity of tapes demanded. C) A decrease in the price of juice causes no change in the quantity of juice demanded. D) A decrease in the price of a gallon of milk causes a decrease in the quantity of milk demanded. Answer: A

A change in which of the following alters buying plans for cars but does NOT shift the demand curve for cars?

a 20 percent increases in the price of a car

which of the following would NOT shift demand curve for turkey?

a change in the price of a turkey

The law of demand implies that if nothing else changes, there is

a negative relationship between the price of a good and the quantity demanded.

In 2000 there were 200,000 gas grills demanded at a price of $500. In 2001 there were more than 200,000 gas grills demanded at the same price. This increases could be the result any of the following EXCEPT

an increase in the supply of gas grills

When economists speak of preferences as influencing demand, they are referring to

an individual's attitudes toward goods and services.

Most goods

are normal goods.

The law of demand implies that, other things remaining the same,

as the price of a cheeseburger rises, the quantity of cheeseburgers demanded will decrease

Which of the following pairs of goods are most likely subtitutes?

cola and lemon lime soda (or anything that can substitute the other product)

suppose people buy more of good 1 when the price of good falls. These goods are

complements

An inferior good is a good for which demand

decreases when income increases.

The demand curve for a normal good shifts leftward if income ______ or the expected furture price________.

decreases; falls

A normal good is a good for which

demand increases when income increases.

a change in the price of a good

does not shift the good's demand curve cause a movement along it.

A reduction in the price of a good

does not shift the good's demand curve leftward but does increase the quantity demanded.

By definition an, inferior good is a

good for which demand decreases when income increases.

Because of increasing marginal cost, most supply curves

have a positive slope

Inferior goods are those for which demand increases as

income decreases

Normal goods are those for which demand decreases as

income decreases

If a good is an inferior good, then purchases of that good will decrease when

income increases.

A normal good is a good for which demand

increases when income increases.

The of demand states that the quantity of a good demanded varies

inversely with its price

A supply curve differs from a supply schedule because a supply curve

is a graph and the supply schedule is a table.

The quantity supplied of a good or service is the quantity that a producer

is willing to sell at a particular price during a given time period

A decrease in the quantity demanded caused by an increase in price is represented by a

movement up and to the left along the demand curve

The law of demand states that

other things remaining the same, the higher the price of a good, the smaller is the quantity demanded.

When we say demanded increases, we mean that there is a

rightward shift of the demand curve.

The demand for a good increases when the price of a substitute _______ and also increases when the price of a complement_________.

rises; falls

The law of demand implies that demand curves

slope down

The law of demand states that other things remain the same, the higher the price of a good, the

smaller is the quantity of the good demanded.

A drop in the price of a compact disc shifts the demand curve for prerecorded tapes leftward. From that you know compact discs and prerecorded tapes are

substitues

People buy more of good 1 when the price of good 2 rises. These goods are

substitutes.

A substitute is a good

that can be used in place of another good.

The quantity demanded is

the amount of a good that consumers plan to purchase at a particular price

The quantity supplied of a good is

the amount that the producers are planning to sell at a particular price during a given time period

If income decreases or the price of a complement rises,

the demand curve for a normal good shifts leftward.

If income increases or the price of a complement falls,

the demand curve for a normal good shifts rightward.

Each point on the demand curve reflects

the highest price consumers are willing and able to pay for that particular unit of a good.

A fall in the price of a good causes producers to reduce the quantity of the good they are willing to produce. This fact illustrates

the law of supply

Which of the following influences people's buying plans and varies moving along a demand curve?

the price of good

People come to expect that the price of a gallon of gasoline will rise next week. As a result,

today's demand for gasoline increases.

A complement is a good

used in conjunction with another good.