Chapter 3

The price of gasoline increases to $10.00 per gallon. What will happen to the sales of large SUV's?

Decrease; shift to the left

If an increase in the price of Good X causes a decrease in the demand for Good Y, we can conclude that:

Goods X and Y are complement goods.

The number of high school graduates nationally is expected to increase through the year 2020. What will happen to the demand for higher education in the United States?

Increase; shift to the right

The price of a movie theater ticket increases to $20.00. What will happen to the amount of movie rentals at Netflix?

Increase; shift to the right

The price of cotton drops, reducing the price of women's dresses by one-half. What would be the effect on the sales of women's shoes?

Increase; shift to the right

The price of ultra-high definition movie streaming players is reduced by half. What would happen to the sales of ultra-high definition movies?

Increase; shift to the right

______________ are enacted when discontented sellers, feeling that prices are too low, appeal to legislators to keep prices from falling.

Price floors

Interpret the following statement: "An increase in the price of wheat will encourage farmers to increase the quantity of wheat supplied to the market."

The statement is correct.

A change in price of a good or service typically causes ___________________________ for that specific good or service.

a change along the supply curve

The nature of demand indicates that as the price of a good increases:

buyers desire to purchase less of it.

When __________________, a firm will supply a higher quantity at any given price for its output, and the supply curve will shift to the right.

costs of production fall

The ___________ is the only price where quantity demanded is equal to quantity supplied.

equilibrium price

The ____________ is the quantity where quantity demanded and quantity supplied are equal at a certain price.

equilibrium quantity

If the price is below the equilibrium level, then the quantity demanded will exceed the quantity supplied. This is known as ___________________.

excess demand

Which of the following would reduce the supply of microcomputers?

higher wage rates for the workers that assemble the computers

If a firm faces ________________________, while the prices for the output the firm produces remain unchanged, a firm's profits will increase.

lower costs of production

A drought decreases the supply of agricultural products, which means that at any given price a lower quantity will be supplied; conversely, especially good weather would shift the __________________.

supply curve to the right

Andy views beer and pizza as complements to one another. If the price of pizza decreases, economists would expect:

Andy's demand for beer to increase.

After widespread press reports about the dangers of contracting "mad cow disease" by consuming beef from Canada, the likely economic effect on the U.S. demand curve for beef from Canada is:

a shift of the demand curve for beef to the left.

Any given demand or supply curve is based on the ceteris paribus assumption that ___________________.

all else is held equal

The downward slope of the demand curve again illustrates the pattern that as _____________ rises, _________________ decreases.

price, quantity demanded

A supply curve is a graphical illustration of the relationship between price, shown on the vertical axis, and ____________, shown on the horizontal axis.

quantity

When economists talk about supply, they are referring to a relationship between price received for each unit sold and the _________________.

quantity supplied

A severe freeze has once again damaged the Florida orange crop. The impact on the market for orange juice will be a leftward shift of:

the supply curve.

According to the law of supply:

there is a direct relationship between price and the quantity supplied.