Chapter 3 - Worth Publishers文档.pptVIP

* The market is the market for cars. * Demand for large cars increased because the price of gasoline, a complement, decreased. * The increase in demand causes an increase in price and quantity. * The market is fresh paper. * The technological innovation has increased the supply, shifting it to the right. * When supply increases, quantity increases and price falls. * The market is the market for movies at the theater. * The demand for movies at the theater decreases (shifts left) because the price of a substitute, the pay-per-view movies, has decreased. * A decrease in demand causes a decrease in price and quantity. * If the computer makers increase production of the computers using the old chip, their supply will increase, which is a shift to the right. * Consumer expectations cause them to decrease demand for the computers with the old chip in anticipation of the new chip. * False. In order for the quantity to decrease, the decrease in demand must be larger than the increase in supply. * A decrease in demand and an increase in supply both cause price to decrease, so the relative sizes of the changes in demand and supply don’t matter. 1b) After a hurricane, Florida hoteliers often find that people cancel their upcoming vacations, leaving them with empty hotel rooms. This causes: a shortage of hotel rooms and prices rise. a shortage of hotel rooms and prices fall. a surplus of hotel rooms and prices rise. a surplus of hotel rooms and prices fall. 3) After a heavy snowfall, many people want to buy secondhand snow blowers at the local tool shop. This causes: a shortage of secondhand snow blowers and prices rise. a shortage of secondhand snow blowers and prices fall. a surplus of secondhand snow blowers and prices rise. a surplus of secondhand snow blowers and prices fall. Check Your Understanding 3-4Question 1 Directions: Read the scenarios and then answer the questions 1ai) As the price of gasoline fell in the United States during the 1990s, more people bought l