ECON 2305 HW #3

The price of a bag of corn chips is​ $3, and the price of a bottle of soda is​ $1. What is the relative price of a bag of corn​ chips?

3 bottles of soda

Which of the following increases the demand for a normal​ good?

The price of the good is expected to increase in the future.

Which of the following shifts the supply curve​ rightward?

a decrease in the price of a factor of production used to produce the good

Which of the following shifts the demand curve for​ oranges?

a decrease in the price of a pound of​ bananas, a substitute in consumption for oranges

The price of cereal rises. As a​ result, people have cereal for breakfast on fewer days and eat eggs instead. This behavior is an example of

a decrease in the quantity demanded of cereal because of the substitution effect.

When​ people's incomes​ increase, the demand for a good increases. The good is called

a normal good.

A price below the equilibrium price results in

a shortage.

If the quantity supplied exceeds the quantity​ demanded, then there is

a surplus and the price is above the equilibrium price.

In the market for​ magazines, the​ "income effect" means that

an increase in the price of magazines will reduce the total purchasing power of magazine​ readers, making them able to afford fewer magazines.

If​ consumers' incomes increase and the demand for bus rides decreases

bus rides are an inferior good.

The quantity demanded of a good or service is the amount that

consumers plan to buy during a given time period at a given price.

A recession occurs and​ people's incomes decrease. Knowing that an iPad is a normal​ good, you predict that the demand for an iPad

decreases.

If income increases or the price of a complement​ falls, the

demand curve for a normal good shifts rightward.

Demands differ from wants because

demands reflect a decision about which wants to satisfy and a plan to buy the​ good, while wants are unlimited and involve no specific plan to acquire the good.

If the demand for hamburgers​ decreases, the equilibrium price

falls and the equilibrium quantity decreases.

If a decrease in the price of gasoline increases the demand for large​ cars, then

gasoline and large cars are complements in consumption.

If the money price of wheat increases and no other prices​ change, the

opportunity cost of wheat rises.

In a supply and demand​ figure, the equilibrium price and quantity are found at the

point where quantity supplied equals quantity demanded.

The opportunity cost of good A in terms of good B is equal to the

ratio of the money price of good A to the money price of good B.

If the price of a candy bar is​ $1 and the price of a fast food meal is​ $5, then the

relative price of a fast food meal is 5 candy bars.

The opportunity cost of a good is the same as its

relative price.

By​ itself, an increase in the number of suppliers in a market results in a

rightward shift in the supply curve

There is a technological advance in the production of ice cream. As a​ result, the supply curve of ice cream shifts​ ________ and​ ________.

rightward; the equilibrium price falls while the equilibrium quantity increases

The law of demand states​ that, other things remaining the​ same, the higher the price of a​ good, the

smaller is the quantity of the good demanded.

The quantity supplied of a good is

the amount that the producers are planning to sell at a particular price during a given time period.

If the price of chicken​ falls, then in the market for beef​,

the demand curve for beef shifts leftward.

Each point on the demand curve reflects

the highest price consumers are willing and able to pay for that particular unit of a good.

A bakery can produce either cakes or cookies. If the price of cookies​ rises, then

the supply curve of cake shifts leftward.

The​ "law of​ supply" refers to the fact​ that, all other things remaining the​ same, when the price of a good rises

there is a movement up along the supply curve to a larger quantity supplied.

Suppose that people find out that eating more fish improves their​ health, leading them to increase their demand for fish. As a​ result, the equilibrium price of fish​ ________ and the equilibrium quantity​ ________.

​rises; increases