Chapter 1-4
Suppose chips and salsa are complements. An increase in the price of salsa will cause: A. An upward movement along the demand curve for salsa. B. A leftward shift of the demand curve for salsa. C. A leftward shift of the demand curve for chips. D. An downward movement along the demand curve for chips.
A and C are correct
supply curve
A curve that shows the relationship between the price of a product and the quantity of the product supplied.
demand schedule
A table showing the relationship between the price of a good and the amount that buyers are willing and able to purchase at various prices
Duppose Congress passes a new tax that decreases the income of Detroit residents. If donuts are a normal good, this will cause the demand for donuts to
Decrease
All else the same, when the supply of a good or service rises, then equilibrium price will also tend to rise.
False
If the price of a good is currently below its equilibrium price, there is a surplus of the good on the market and we can expect the price of the good to increase.
False
Which of the following would cause an increase in the equilibrium price of Pepsi?
The government decides to impose a tax on the sale of all carbonated beverages, such as Pepsi..
this is a Market
You have a garage sale and you put a price on each item based on what you think you can sell it for. The buyers come to your sale and often try to negotiate a lower price.
A decrease in the demand for a good can be expected to cause _____ in the equilibrium price of the good and _____ in the equilibrium quantity of the good bought and sold, all else the same.
a decrease : a decreas
inferior good
a good that consumers demand less of when their incomes increase
perfectly competitive market
a market that meets the conditions of 1) many buyers and sellers, 2) all firms selling identical products, and 3) no barriers to new firms entering the market
supply schedule
a table that shows the relationship between the price of a good and the quantity supplied
You observe the price of a good rises and the quantity sold increases. This is the result of
an increase in demand
Assume apples and oranges are substitutes for consumers. A winter freeze destroys half the orange crop. In the market for apples, we can expect
an increase in the demand for apples.
shifts the supply curve rightward
an increase in the number of companies producing this good
which of the following shifts the supply curve rightward?
an increase in the number of companies producing this good
An increase in the price of coffee will cause
an upward movement along the demand curve for coffee.
The law of demand states, that all else the same
as the price of a good rises, the quantity demanded of the good falls
normal goods
causes an increase in demand as income increases
During a recession (downturn) in the economy firms lay off workers and the unemployment rate rises. During these times we can expect the demand for normal goods to ___ and the demand for inferior goods to ____.
decrease : increase
An inferior good is a good for which demand
decreases when income increases
An inferior good is a good for which demand
decreases when income increases.
market
place (physical or virtual) where buyers and sellers interact and determine the price of a good.
quantity demanded
the amount of a good that buyers are willing and able to purchase
quantity supplied
the amount of a good that sellers are willing and able to sell
Law of Demand
the claim that, other things being equal, the quantity demanded of a good falls when the price of the good rises
Law of Supply
the claim that, other things equal, the quantity supplied of a good rises when the price of the good rises
Each point on the supply curve represents
the lowest price buyers will pay for another unit of the good.
Suppose the quantity demanded of a good is larger than the quantity supplied of a good. We can expect:
the price of the good to increas
Suppose people believe the price of gas will decrease next week. This is most likely to cause
today's demand for gas to decrease.
An increase in the cost of producing a good or service will cause a leftward shift of the supply curve.
true
if supply and demand both increase then equilibrium quantity will also increase.
true