Ch 3 Econ

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The findings of Nagaraj and Reimer show that digital and print copies of books are

complements because the decrease in the price of digital books to zero is causing an increase in the quantity demanded for print copies of the same book.

Goods and services that can be used for the same purpose are​ ________, and goods and services that are used together are​ ________.

substitutes; complements

a. Can we conclude from this information that the demand curve for visiting the Met is upward​ sloping?

​No, it is much more likely that during 2018 there was an increase in demand for visits to the Met.

Is he correct that if the price of a product​ increases, the demand for the product is​ reduced?

​No: an increase in the price of a product will cause a decrease in the quantity demanded of that​ product, not a decrease in demand.

The law of demand is the assertion that

the quantity demanded of a product is inversely related to its price.

An increase in the price of a product causes a decrease in quantity demanded because of the income and substitution effects. More​ specifically,

the substitution effect is the decrease in quantity demanded because the product is more expensive relative to other goods and the income effect is the decrease in quantity demanded owing to the decline in​ consumers' purchasing power.

a. What approach to analyzing demand curves is Becker​ describing?

. the ceteris paribus condition

What do economists mean when they use the Latin expression ceteris paribus​?

All else equal.

Which of the following would not shift the demand curve for a good or​ service?

a change in the price of the good or service

Economists refer to the necessity of holding all variables other than price constant in constructing a demand curve as the

ceteris paribus condition.

a. If the price of digital books​ rises, what would you expect to happen to the demand for print​ books? If many book readers consider print books and digital books to be​ substitutes, then an increase in the price of digital books will

increase the demand for print​ books, shifting the demand curve for print books to the right.

the law of demand is the

rule​ that, holding everything else​ constant, when the price of a good​ falls, the quantity demanded will​ increase, and when the price of a good​ rises, the quantity demanded will decrease.

Briefly discuss what might account for this result and why it differs from the answer you gave to part​ (a). ​(​Hint: Why was the finding of increased sales of physical books particularly strong for less popular​ books?)

C. As more books become available as free​ downloads, readers of these books recommend them to other​ readers, causing an increase in the demand for both the print and the digital versions of the​ book, particularly among readers who prefer to read a physical book.

b. Which would be better news for firms selling traditional canned​ tuna: Fact ​(i​)is more important in explaining their declining sales than fact ​(ii​),or the​ reverse?

Firms would prefer fact ​(ii​)more than fact ​(i​)because it is easier for the traditional canned tuna producers to change their marketing strategy and also offer their tuna in pouches and trendy flavors than it is to change the minds of millennial and generation Z consumers about the desirability of eating tuna.

b. As an​ economist, how can you hope that your analysis of the demand for butter is accurate if you neglect thousands and thousands of other​ variables?

In the model of demand and​ supply, we focus only on the variables that experience has shown are the most important in determining the demand for a​ product: income, price of substitutes and​ complements, taste for the​ good, population, and the expected future price.

How has the​ one-child policy changed the relative demand for goods and services in​ China?

It has undoubtedly shifted away from goods and services appealing to youthful​ buyers, particularly youthful female buyers.

Which of the following is the correct definition of demand​ curve?

a curve that shows the relationship between the price of a product and the quantity of the product demanded

The decline in the number of cable television subscriptions is likely the result of

a leftward shift in the demand​ curve, but you would need to have information on changes​ (if any) in the price of cable television subscriptions to be sure.

A good for which demand increases as income rises is​ ________, and a good for which demand increases as income falls is​ ________.

a normal​ good; an inferior good

The falling sales of traditional cans of tuna are the result of

a shift in the demand curve for tuna to the left.

Which of the following is the correct definition of demand​ schedule?

a table that shows the relationship between the price of a product and the quantity of the product demanded

As a forecaster working for​ Allbirds, you should be concerned about point​ (a) and​ (b) because

both limit the size of the market. On the other​ hand, increased everyday comfort brought from the shoes may increase the demand for the​ shoe, causing an increase in sales.

From the list​ below, select the variable that will cause the demand curve to​ shift:

consumer income

​________ is used to describe how changes in price affect a​ consumer's purchasing​ power, and​ ________ is used to describe how a change in price affects the quantity demanded of a good by making it more or less expensive than substitute goods.

​The income​ effect; the substitution effect

The article also explained that New York City experienced an increase in the number of tourists during 2018 and that during the​ year, the Met offered several exhibitions that received good reviews. Does this additional information help you answer the question in part ​(a​)?

​Yes, this additional information reinforces the increase in demand for visits to the Met in part​ (a).


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