Exam 3: Demand and Supply 

An increase in the price of one good will decrease the demand for a substitute good.

When a good is sold at its equilibrium price, the seller is not engaged in a voluntary exchange.

An increase in demand occurs when the demand curve shifts right.

A shortage can be eliminated by increasing the price of a good.

If other things are held constant, an increase in wages earned by workers in the steel industry will cause

What is on the horizontal axis when we plot a supply curve?

In deciding how much of its product to supply to the market, a firm will consider the market price of the good.

Table 3.3 -According to Table 3.3, the equilibrium price for CDs is

How do you depict an increase in supply on a graph of supply and demand?

An increase in demand for one good results from a _________ in the price of a complement good.

As the price of a good rises, consumers will buy lower quantities of the good due to the income and substitution effects.

Table 3.3 -According to Table 3.3, there is a shortage of 1500 CDs at a price of

A decrease in demand for one good results from a _________ in the price of a substitute good.

At prices below the equilibrium price, shortages occur.

At the equilibrium price, the good is not scarce.

Which of the following variables will change in response to a change in price?

What would have to happen to roundtrip airfare to Hawaii in order for the demand for hotel rooms in Hawaii to increase?

Suppose that most consumers consider ice cream and frozen yogurt to be substitutes for one another. How is the market for ice cream affected by an increase in the price of frozen yogurt?

The law of demand contradicts the law of supply.

_________ is a condition in which all nominal prices are rising.