Homework Three

Choose the correct statements about competitive markets. 1. All competitive markets are physical places where buyers and sellers meet 2. A single buyer in a competitive market cannot influence the price 3. A competitive market has many sellers 4. In a competitive market, prices are eventually driven down to zero

2. A single buyer in a competitive market cannot influence the price 3. A competitive market has many sellers

The money price of a pack of frozen burritos is $0.20 and the money price of a pack of microwave popcorn is $0.60. The opportunity cost of a pack of microwave popcorn is ? The relative price of a pack of microwave popcorn is an opportunity cost because​ ______.

3.00 packs of frozen burritos, which is the relative price of a pack of microwave popcorn the relative price tells us how many boxes of ramen noodles we must give up to get a pack of microwave popcorn

In​ 1998, the price of a barrel of oil was​ $20. In​ 2012, the price of a barrel of oil was​ $106. In​ 1998, the price of a loaf of bread was​ $0.86. In​ 2012, the price of a loaf of bread was​ $2.32. Between 1998 and​ 2012, the relative price of a barrel of oil with respect to a loaf of bread​ _______ and the relative price of a loaf of bread with respect to a barrel of oil​ _______.

Rose;fell

All of the following will change the demand for onions except​ _______. An increase in the price of onions _______.

a change in the price of onions decreases the quantity of onions demanded and results in a movement up along the demand curve for onions

The price of food increased during the past year. The law of demand applies to food because when the price of food​ rises, there is​ ______.

both a substitution effect and an income effect

​If, as the price of a DVD player increases​, the quantity of DVDs that people buy decreases​, then DVD players and DVDs are​ _______.

complements

A cellphone and a phone call are​ ______. A text message and an email are​ ______.

complements ; substitues

Dairies make​ low-fat milk from​ full-cream milk. In the process of making​ low-fat milk, the dairies produce​ cream, which is made into ice cream. A rise in the wage rate of dairy workers​ ______ the supply of​ low-fat milk. A rise in the price of cream​ ______ the supply of​ low-fat milk.

decrease; increase

A rise in the price of low-fat milk ______ the supply of low-fat milk

does not change

With the period of low rainfall​ extending, dairies raise their expected price of​ low-fat milk next year. The supply of​ low-fat milk​ ______ today. With advice from​ health-care experts, dairy farmers decide to switch from producing​ full-cream milk to growing vegetables. The supply of​ low-fat milk​ ______.

does not change; decreases

A new technology lowers the cost of producing ice cream. The supply of​ low-fat milk_______

increases

A demand curve ___________ .

is a marginal benefit curve

The substitution effect influences food purchases because when the price of a certain food​ rises, other things remaining the​ same, ______. Consumers​ ______.

its relative price​ rises; purchase more of a different food that is less expensive

The quantity demanded of a good or service is ?

measured as an amount per unit of time

Pasta and pizza are​ ______. A video game and a laptop are​ ______.

substitues ; complements

Coal and oil are​ ______. A skateboard and an iPod are​ ______.

substitutes ; complements

A supply curve _____.

tells us the lowest price at which someone is willing to sell

The income effect influences food purchases because when the price of a certain food​ rises, other things remaining the​ same, ______. Consumers​ ______.

the price rises relative to​ income; cannot afford to buy all the things they previously​ bought, so they normally buy less of the food that has experienced the price rise

Pizza and sausage are​ ______. Wheat and rye are​ ______.

​complements; substitutes