Business economics chapter 4-6

Which of the following shifts the supply curve for pizza to the right?

a decrease in the price of cheese, an input to pizza

normal good

a good for which an increase in income leads to an increase in demand

The best definition of a market is

a group of buyers and sellers of a good or service.

market

a group of buyers and sellers of a particular good or service

competitive market

a market in which there are many buyers and many sellers so that each has a negligible impact on the market price

income elasticity of demand

a measure of how much the quantity demanded of a good responds to a change in consumers' income, computed as the percentage change in quantity demanded divided by the percentage change in income

surplus

a situation in which quantity supplied is greater than quantity demanded

equilibrium

a situation in which the market price has reached the level at which quantity supplied equals quantity demanded

supply schedule

a table that shows the relationship between the price of a good and the quantity supplied

A linear, downward-sloping demand curve is

inelastic at some points, and elastic at others

An increase in a good's price reduces the total amount consumers spend on the good if the ________ elasticity of demand is ________ than one.

price, greater

The discovery of a large new reserve of crude oil will shift the ________ curve for gasoline, leading to a ________ equilibrium price.

supply, lower

quantity demanded

the amount of a good that buyers are willing and able to purchase

quantity supplied

the amount of a good that sellers are willing and able to sell

law of supply and demand

the claim that the price of any good adjusts to bring the quantity supplied and the quantity demanded for that good into balance

law of demand

the claim that, other things being equal, the quantity demanded of a good falls when the price of the good rises

law of supply

the claim that, other things being equal, the quantity supplied of a good rises when the price of the good rises

An increase in the supply of grain will reduce the total revenue grain producers receive if

the demand curve is inelastic.

If the price elasticity of supply is zero, the supply curve is

vertical

The market for which product best fits the definition of a perfectly competitive market?

eggs

In a perfectly competitive market,

every seller takes the price of its product as set by market conditions.

If pasta is an inferior good, then the demand curve shifts to the ________ when ________ rises.

left, consumers' income

supply curve

a graph of the relationship between the price of a good and the quantity supplied

price elasticity of demand

a measure of how much the quantity demanded of a good responds to a change in the price of that good, computed as the percentage change in quantity demanded divided by the percentage change in price

complements

two goods for which an increase in the price of one leads to a decrease in the demand for the other

subsitutes

two goods for which an increase in the price of one leads to an increase in the demand for the other

total revenue

the total amount of money a firm receives for the sales of its output

shortage

A situation in which quantity demanded is greater than quantity supplied

demand curve

a graph of the relationship between the price of a good and the quantity demanded

If the economy goes into a recession and incomes fall, what happens in the markets for inferior goods?

Prices and quantities both rise.

Movie tickets and film streaming services are substitutes. If the price of film streaming increases, what happens in the market for movie tickets?

The demand curve shifts to the right.

inferior good

a good for which an increase in income reduces the quantity demanded

cross-price elasticity of demand

a measure of how much the quantity demanded of one good responds to a change in the price of another good, computed as the percentage change in quantity demanded of the first good divided by the percentage change in the price of the second good

price elasticity of supply

a measure of how much the quantity supplied of a good responds to a change in the price of that good, computed as the percentage change in quantity supplied divided by the percentage change in price

Elasticity

a measure of the responsiveness of quantity demanded or quantity supplied to a change in one of its determinants

demand schedule

a table that shows the relationship between the price of a good and the quantity demanded

Which of the following might lead to an increase in the equilibrium price of jelly and a decrease in the equilibrium quantity of jelly sold?

an increase in the price of grapes, an input into jelly

Which of the following will shift the demand curve for pizza to the right?

an increase in the price of hamburgers, a substitute for pizza

Which of the following moves the pizza market up along a given supply curve?

an increase in the price of pizza

An increase in ________ will cause a movement along a given supply curve, which is called a change in ________.

demand, quantity supplied

In competitive markets, farmers adopt new technologies that will eventually reduce their revenue because

each farmer is a price taker

A good tends to have a small price elasticity of demand if

the good is a necessity.

A change in which of the following will NOT shift the demand curve for hamburgers?

the price of hamburgers

equilibrium price

the price that balances quantity supplied and quantity demanded

equilibrium quantity

the quantity supplied and the quantity demanded at the equilibrium price

The ability of firms to enter and exit a market over time means that, in the long run,

the supply curve is more elastic