Ch 3 Flashcards
When the price of Nike fell, Ronaldo purchased more Nike soccer balls and fewer Adidas soccer balls. Which of the following best explains Rinaldo’s decision to buy more Nike soccer balls?
The substitution effect
A demand curve shows the relationship between
Price and quantity demanded
If x is a normal good, a rise in money income will shift the
Demand curve for x to the right
Other things equal, which of the following might shift the demand curve for gasoline to the left
The development of a low-cost electric automobile
If the demand for steak (a normal good) shifts to the left, the most likely reason is that
consumer incomes have fallen
Which of the following would most likely increase the demand for gasoline
Expectation by consumers the gasoline prices will be higher in the future
Supposed that tacos and pizzas are substitutes, and that soda and pizza are compliments. We would expect an increase in the price of pizza to
Reduce the demand for soda and increased the demand for tacos
In the corn market, demand often exceeds supply and supply sometimes exceeds demand. The price of corn rises and falls in response to changes in supply and demand. Which of these two statements are the terms demand and supply being used correctly
The second statement
The term quantity demanded
Refers to the amount of a product that will be purchased at some specific price
A decrease in the demand for recreational fishing boats might be caused by an increase in the
Price of outboard motors
If the supply of a product decreases and the demand for that product simultaneously increases, then equilibrium
Price must rise, but equilibrium quantity may rise, fall, or remain unchanged
Supposed that in 2007, Ford sold 500,000 mustangs at an average price of $18,800 per car; in 2008, 600,000 mustangs were sold on average price of 19,500 per car these statements
Suggest that the demand for mustangs increased between 2007 and 2008
With a downsloping demand curve up sloping supply curve for a product, a decrease in resource prices will
Decrease equilibrium price and increased equilibrium quantity
Over time, the equilibrium price of a gigabyte of computer memory has fallen while the equilibrium quantity purchased has increased. Based on this we can conclude that
Increases in the supply of computer memory have exceeded increases in demand
If market demand increases and market supply decreases, the change in equilibrium price is unpredictable without first knowing the exact magnitudes of the demand and supply changes true or false
False
A market
Is an institution that brings together buyers and sellers
In presenting the idea of a demand curve, economists presume the most important variable in determining the quantity demanded is
The price of the product itself
Which of the following would not shift the demand curve for beef
A reduction in the price of cattlefeed
DVD players and DVDs are
Complementary goods
Which of the following will cause the demand curve for product a to shift to the left
An increase in money income if a is an inferior good
If X is a normal good, a rise in money income will shift the
Demand curve for X to the right
College students living off campus frequently consumed large amounts of Romain noodles and boxed macaroni and cheese. When they finish school and start careers, their consumption of both goods frequently declines. This suggests that Ramen noodles and boxed macaroni and cheese are
Inferior goods
Consumer income increase, the demand for product X
May shift either to the right or left
In moving along the supply curve which of the following is not held constant
The price of the product for which the supply curve is relevant
Supposed that corn prices rise significantly. Farmers expect the price of corn to continue rising relative to other crops, then we would expect
The supply to increase as farmers plant more corn
At the current price there is a shortage of a product. We would expect price to
Increase, qty demanded to decrease, and quantity supplied to increase
Assuming competitive markets with typical supply and demand curves, which of the following statements is correct
An increase in demand with no change in supply will result in an increase in sales
A government subsidy per unit of output increases supply true or false
True
Toothpaste and toothbrushes are substitute goods true or false
False
