1) The definition of a “market” in context of economics is “the process of buyers and sellers exchanging goods and services.” The first paragraph of 3.1 also states directly that internet stores are markets. The statement being evaluated is therefore false – virtual transactions do indeed occur within a market.
7) a) Demand for hamburger meat would go down, because chicken is cheaper. (The prices of related goods) b) Demand for hamburger meat goes down, because the buns used to serve the meat are no longer cheap enough for the meat to be worth it. (The prices of related goods) c) Demand for hamburger meat goes up, because the revelation that hamburger meat is healthy will have people eating it more than they usually would. (Tastes change in favour of the good) d) The demand for hamburger meat goes up, because there are now more people who want the meat, but not enough meat to give everyone an equal share. (Increase in the number of buyers in the market)
9) a) E. b) C. c) B. d) F.
23) a) B. b) C. c) D. d) E.
Pgs. 93 – 96
1) If the price of a product is above the equilibrium price, there is a surplus. To head towards the equilibrium price again, prices of the product would be decreased, as would production of the product. That in turn will encourage consumers to buy the now cheaper product. When they buy the product because the price is low, the surplus will be eliminated. If the opposite is true however, and there is a shortage, to head back towards equilibrium, prices would increase. Increased prices will reduce demand, and will allow the supplier time to restock before lowering the prices again.
5) The commissioner could do one of two things. He could increase wages for the lifeguards (causing the supply of lifeguards to go up), or he could reduce the amount of beaches that would require lifeguards