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