Chapter 2 Supply and Demand
If, in response to an increase in the price of chocolate, the quantity demanded of chocolate decreases economists would describe this as
a decrease in quantity demanded.
Which of the following will shift the demand curve for a good?
a decrease in the price of a complementary good
The ________ effect ref10. If an increase in income leads to in an increase in the demand for peanut butter, then peanut butter is
a normal good.
Rent control is an example of
a price ceiling
Holding everything else constant, an increase in the price of MP3 players will result in
) a decrease in the quantity of MP3 players demanded.
A change in supply is represented by a shift of the supply curve.
TRUE
An increase in the quantity of a product supplied is caused by an increase in the price of the product.
TRUE
If consumers believe the price of iPads will decrease in the future, this will cause the demand for iPads to decrease now.
TRUE
In January, buyers of gold expect that the price of gold will rise in February. What happens in the gold market in January, holding all else constant?
The demand curve shifts to the right.
At a product's equilibrium price
the product's demand curve crosses the product's supply curve.
Chips and salsa are complements. If the price of salsa decreases, the demand for chips will increase.
True
If in the market for peaches, the supply curve has shifted to the left,
the supply of peaches has decreased.
Excess demand causes a shortage.
true
A decrease in the price of GPS systems will result in
a smaller quantity of GPS systems supplied.
Which is not a factor that shifts the demand curve
altered prices for inputs.
The law of supply states that, holding everything else constant,
an increase in price causes an increase in quantity supplied.
If an increase in income leads to a decrease in the demand for popcorn, then popcorn is
an inferior good.
The law of demand implies, holding everything else constant, that
as the price of bagels increases, the quantity of bagels demanded will decrease.
The ________ effect refers to the change in quantity demanded for a good that results from the effect of a change in the good's price on consumer's purchasing power.
income
A successful marketing campaign will increase the demand for Red Bull. This will ________ the equilibrium price and ________ the equilibrium quantity of Red Bull.
increase; increase
To affect the market outcome, a price ceiling
must be set below the equilibrium price.
What does ceteris paribus mean?
other things being equal.
By drawing a demand curve with ________ on the vertical axis and ________ on the horizontal axis, economists assume that the most important determinant of the demand for a good is the ________ of the good.
price; quantity; price
Suppose that when the price of raspberries increases, Lonnie increases his purchases of papayas. To Lonnie,
raspberries and papayas are substitutes.
Which is not a factor that shifts the demand curve
change in price
In the economic sense, almost everything is scarce. ________ of a good or service occurs when the quantity demanded is greater than the quantity supplied at the current market price.
A shortage
What is the difference between an "increase in demand" and an "increase in quantity demanded"?
An "increase in demand" is represented by a rightward shift of the demand curve while an "increase in quantity demanded" is represented by a movement along a given demand curve.
What is the difference between an "increase in supply" and an "increase in quantity supplied"?
An "increase in supply" means the supply curve has shifted to the right while an "increase in quantity supplied" refers to a movement along a given supply curve in response to an increase in price.
A normal good is a good for which the demanded increases as income decreases, holding everything else constant.
FALSE
The minimum wage is an example of a price ceiling.
FALSE
Suppose a price floor on sparkling wine is proposed by the Health Minister of the country of Vinyardia. What will be the likely effect on the market for sparkling wine in Vinyardia?
Quantity demanded will decrease, quantity supplied will increase, and a surplus will result.
Elvira decreased her consumption of bananas when the price of peanut butter increased. For Elvira, peanut butter and bananas are
complements in consumption.
If a demand curve shifts to the right, then
demand has increased.
If a firm expects that the price of its product will be higher in the future than it is today
the firm has an incentive to decrease supply now and increase supply in the future.
A change in all of the following variables will change the market demand for a product except
the price of the product.
