EC101 chapter 3

If the demand for olives falls when the price of cheese falls, then we know that cheese and olives are

substitutes

If the demand for gadgets increases as a result of a decrease in the price of widgets, the widgets and gadgets are

complementary goods

Suppose you camped out in front of an electronics store to be one of the 200 lucky people able to purchase the latest gaming system. You bought the system for $350. Two weeks later you see that the same system can be sold on e-Bay for $600, so you sell your system. Your market role was as a

consumer at the electronics store and a seller on eBay

"All else constant, consumers will purchase more of a good as the price falls." This statement reflects the behavior underlying

the demand curve

Suppose that new scientific studies conclude that high-fiber diets do not reduce the risk of developing colon cancer as well as was previously thought. The likely result will be that the

demand for high-fiber foods will decrease

Which of the following is not true of the demand curve

It reflects the sellers reservation prices

A good example of central planning at work in the U.S. is

New York City's rent control program

when a market is in equilibrium

There is neither excess demand nor excess supply

if the demand for a good decreases as income decreases, then the good is

a normal good

When a slice of pizza at the student union sold for $2, Moe did not purchase any. When the price fell to $1.75, Moe purchased a slice each day for lunch. Thus, we can infer that Moe's reservation price for a slice of pizza is

at least 1.75 but less than 2.00

in a free market, if the price of a good is below the equilibrium price, then

buyers, hoping to ensure they acquire the good, will bid the price higher

If an increase in the price of good X leads to a decrease in the demand for good Y, then

good X and good Y are complements.

as the price of a good rises

more firm can cover their opportunity cost of producing the good

when a market is not in equilibrium

the economic motives of sellers and buyers will move the market to its equilibrium

suppose that as price of apples rises, people switch from eating apples to eating oranges, this is known as

the substitution effect of a price change

excess demand occurs

when price is below equilibrium price