Chapter 4

A shift in the demand curve for a product is caused by changes in the conditions of demand, rather than a change in the price of the product. Is this statement TRUE or FALSE

• T

• F

A good for which demand decreases with increase in income of consumers is called

• Complement good

  
  

•  Inferior good

Goods which are consumed together are called

• Complement goods

• Substitute goods

The law of demand states that an increase in the price of a good decreases the demand for that good.

• TT

• F

If apples and oranges are substitutes, an increase in the price of apples will decrease the demand for oranges.

• T

• F

If golf clubs and golf balls are complements, an increase in the price of gold clubs will decrease the demand for golf balls.

• T

• F

 If consumers expect the price of shoes to rise, there will be an increase in the demand for shoes today.

• T

• F

An increase in the price of steel will shift the supply of automobiles to the right

• T

• F

When the price of a good is below the equilibrium price, it causes a surplus.

• T

• F

If there is a shortage of a good, then the price of the good tends to fall.

• T

• F