Chapter 3 economics assignment

Consumers experience ___________ marginal utility the more they consume of a particular good or service.

diminishing

Price and quantity supplied have a(n) ______________ relationship

direct

When a price ceiling is established, the new price and quantity are now at:

disequilibrium

______________ output is where quantity demanded and quantity supplied are equal in a competitive market.

equilibrium

If a decline in demand is greater than an increase in supply, the equilibrium quantity will ____________.

fall

A price _____________ is legally mandated price imposed above the price, otherwise known as equilibrium price, that would be established between buyers and sellers in a free market.

floor

Other things equal, firms will produce and offer for sale ___________ of their product at a high price than at a low price

more

A change in demand occurs due to a change in the consumer's mind about purchasing a product that is based on something other than the __________ of the product.

price

A change in quantity demanded is caused an increase or decrease in the __________ of the product under consideration and nothing else

price

A change in quantity demanded is caused by an increase or decrease in the ______________ of the product under consideration and nothing else.

price

A change in quantity supplied is caused by an increase or decrease in the ____________ of the product under consideration and nothing else.

price

All of the following are determinants of demand, except:

price of substitutes in production

Products whose demand varies directly with changes in money or income are called normal or _______________ goods.

superior

A surplus is also known as an excess of _______________.

supply

Improvements in technology are a determinant of _________.

supply

Market ______________ is a schedule or curve showing that the various amounts of a product that producers

supply

Producer expectations of future prices are a determinant of ____________ (one word).

supply

Substitution in production is a determinant of _______________.

supply

The _______________ of a good or service by a producer essentially reflects the marginal cost of producing the good or service.

supply

The number of sellers or competitors in a market is a determinant or shiftier of the _____________ curve.

supply

______________ refers to the production of a product, whereas demand refers to the consumption of a product.

supply

All of the following would cause an increase in equilibrium price and quantity, except an increase in:

supply while holding demand constant

Which of the following summarize the determinants of supply and their net effect on the supply curve?

1. A change in the number of sellers will increase or decrease supply and cause the supply curve to shift to the right and left respectively. 2. A change in resource prices will increase or decrease supply and cause the supply curve to shift to the right or left respectively.

Which of the following scenarios describe the appropriate effects on equilibrium price and quantity due to a decrease in supply while holding everything else constant?

1. An oil spill causes several fisherman to leave the shrimp business and the equilibrium price of shrimp increases while quantity decreases 2. A fishing tax is placed on all shrimp and the equilibrium price of shrimp increases while quantity decreases

Which of the following type of goods affect the demand for another product due to a change in their price?

1. Complementary goods 2. Substitute goods

Which of the following are determinants of demand?

1. Consumer tastes 2. Changes in income 3. Price of related goods 4. Consumer expectations 5. Number of buyers

Which of the following show the effects on equilibrium price and quantity due to an increase in demand, while holding everything else constant?

1. Consumers expect the price of shrimp to increase in the future, therefore the equilibrium price and quantity increase now 2. 3-D televisions become popular, therefore the equilibrium price and quantity increase 3. The price of Coke increases, therefore the equilibrium price and quantity of Pepsi increase

Which of the following statements summarize the winners and losers of a government-controlled market?

1. Farmers are winners with price floors because they will be willing to produce and offer more and make more money. 2. Landlords are losers with rent controls as it is less attractive for landlords to offer housing. 3. Consumers are losers with price floors as prices of products will increase. 4. Families are winners with rent controls as more families are willing to consume rental housing at the lower price.

Which of the following best explains why economists "sound the alarm" when politicians advocate government-controlled prices such as price ceilings or price floors?

1. Government-controlled prices cause surpluses 2. Government-controlled prices cause shortages 3. Government-controlled prices distort resource allocation 4. Government-controlled prices may cause potential environmental damage

What are the ways that government can cope with a surplus?

1. It can purchase the surplus of output 2. It can restrict supply or increase demand

Choose all of the following that will cause a change in supply, not quantity supplied.

1. Number of sellers 2. Technology 3. Producer expectations

Which of the following demonstrate the appropriate effect on equilibrium price and quantity as a result of changes in supply and demand?

1. Supply decreases and demand stays constant; therefore equilibrium price increases and quantity decreases. 2. Demand increases and supply increases; therefore equilibrium quantity increases and the change in price is indeterminate. 3. Supply increases and demand stays constant; therefore equilibrium price decreases and quantity increases. 4. Demand increases and supply stays constant; therefore equilibrium price increases and quantity increases.

Identify those statements that correctly state the effects on equilibrium price and quantity as a result of changes in supply and/or demand?

1. When the supply and the demand for corn rises proportionally, the change in equilibrium price is indeterminate, but quantity will rise. 2. When the supply of DVD players falls while holding demand constant, the equilibrium price will rise and quantity will fall. 3. When the demand for health care rises while holding supply constant, the equilibrium price and quantity of health care will rise.

__________________ in supply while holding demand constant results in an increase in equilibrium price, but a decrease in equilibrium quantity.

1. a shift leftward 2. a decrease

Government-controlled prices cause:

1. distortions in resource allocation 2. negative side effects 3. surpluses 4. shortages

In free markets, though prices will rise and fall, ________ and __________ will always be achieved.

1. equilibrium quantity 2. equilibrium price

Which of the following are determinants of supply 2?

1. resource prices 2. taxes and subsidies 3. technology

Government-controlled prices in the form of price ceilings and price floors

1. stifle the rationing function of prices 2. distort resource allocation 3. produce negative side effects

Which of the following are determinants of supply?

1. taxes 2. subsidies

Which of following are substitutes?

Pepsi and Coca-Cola

A decrease in equilibrium price and indeterminate result on equilibrium quantity is a result of which of the following?

An increase in supply and a simultaneous and proportional decrease in demand

Which of the following reasons is NOT an explanation for why the demand curves slopes downward and to the right?

As price on the vertical axis increases, quantity demanded on the horizontal axis remains unchanged.

Among the following products, which best exemplifies a normal good?

Beef

Which of the following results in a decrease in the equilibrium quantity and an indeterminate change in price?

Government taxes home builders, and a proportional decrease in consumer incomes.

_____________ resource prices raise production costs and, assuming a fixed product price, ____________ profits.

Higher;reduce

Which of the following describe the effects on equilibrium price and equilibrium quantity as a result of a decrease in supply and a simultaneous and proportional increase in demand?

Price rises and the change in equilibrium quantity is indeterminate

Which determines market price and equilibrium output in a market?

The interaction of buyers and sellers

Which of the following consists of a large number of independently acting buyers and sellers?

a competitive market

A decrease in demand while holding supply constant results in _____________ in both equilibrium price and quantity

a decline

A decrease in supply and a simultaneous and proportional decrease in demand will result in ________ equilibrium quantity, with __________ equilibrium price.

a decrease in; no effect on

A price __________ is the maximum legal price a seller may charge for a product or service.

ceiling

Government-controlled prices in the form of price ___________ and price ___________ stifle the rationing function of prices, distort resource allocation, and cause negative side-effects.

ceilings; floors

Mandated prices established by government are often set ____________or ____________ equilibrium price.

above; below

Which of the following refers to a particular apportionment or mix of goods and services most highly valued by society?

allocative efficiency

The price of new cars and the sale of new cars represents:

an inverse relationship

At any price below equilibrium price, or price ceiling, quantity demanded will ___________ quantity supplied resulting in a persistent excess demand or shortage of product.

be greater than

An economic unit, meaning a household, firm or government, should continue to engage in an activity so long as the marginal ____________ exceeds the marginal ____________.

benefit;cost

Equilibrium price is otherwise known as market-____________ price.

clearing

____________ goods are used together with other goods.

complementary

The concept of demand can be summarized by a schedule or curve showing the quantity of a product that would be:

consumed at various possible prices

One of the determinants of demand is __________ expectations.

consumer

The _____________ incurred by firms when producing a good or service arise from the prices of the inputs that are used to produce said good or service.

costs of production

An increase in supply and a simultaneous and proportional decrease in demand will result in a(n) ____________ in equilibrium price, with no effect on equilibrium quantity.

decrease

If an increase in supply is smaller than a decrease in demand, the equilibrium quantity will _____________.

decrease

An increase in supply while holding demand constant results in a(n) ______________ in equilibrium price, but a(n) _____________ in equilibrium quantity.

decrease; increase

If the supply of corn increases, holding demand constant, the equilibrium price of corn will _________ and the quantity will ___________.

decrease; increase

A buyer's intentions or plans in regard to the purchase of a product is known as:

demand

The numbers of buyers is a determinant of market _____________.

demand

A shortage results from an excess of quantity _____________.

demanded

A demand curve measures quantity ___________ on the horizontal axis and ___________ on the vertical axis.

demanded; price

At the equilibrium price, quantity _____________ equals quantity ___________.

demanded; supplied

With a price ceiling, quantity ________ will exceed quantity _________, resulting in a persistent shortage of product.

demanded;supplied

The _____________ of supply are any factors other than the product's ____________ that have an effect on the supply of a good or service and cause the supply curve to shift.

determinants; price

The ______________ of supply are any factors other than the product's ______________ that have an effect on the supply of a good or service and cause the supply curve to shift.

determinants; price

A price ______________ is a legally mandated price imposed above the price, otherwise is known as equilibrium price, that would be established between buyers and sellers in a free market.

floor

Government may place legal limits on prices when it is determined that prices are unfairly ____________ for buyers or unfairly ____________ for sellers.

high; low

Government may place legal limits on prices when it is determined that prices are unfairly ______________ for buyers or unfairly ______________ for sellers.

high; low

Quantity demanded is illustrated on the _____________ axis, while price is illustrated on the _____________ axis.

horizontal (x) ; vertical (y)

A decrease in supply and proportional increase in demand will result in a(n) ___________ in equilibrium price, with no effect on equilibrium quantity.

increase

A simultaneous and proportional increase in supply and demand will result in a(n) ____________ in equilibrium quantity, with no effect on equilibrium price.

increase

An increase in the sales, property or any other tax will ______________ production costs and _____________ supply.

increase; decrease

A favorable change in consumer tastes and preferences for a product will ___________ demand, illustrated as a shift of the demand curve to the _____________.

increase; right

The fundamental characteristic of demand, other things equal, is that as the price falls, the quantity demanded for a product _____________.

increases

The vast majority of goods that are not related to one another are called ____________ goods.

independent

Products that have decreased demand when consumer incomes rise and increased demand when consumer incomes fall are called ____________ goods.

inferior

The law of demand describe a(n) ______________ relationship between the price of a good or service and the quantity demanded of that good or service.

inverse

There is a(n) ____________ relationship between the price of a good or service and the quantity demanded for that good or service.

inverse

When two variables are being examined, and one variable moves one way and the other variable moves in the opposite direction, this is called a(n)

inverse relationship

If costs of production rise, the producer has an incentive to produce ______________ output.

less

Diminishing marginal utility states that less satisfaction is derived from each successive unit of a product consumed. Therefore, the law of demand is upheld because, as each successive unit yields __________, consumers will buy additional units only if the price of those units is progressively __________.

less and less utility; reduced

The income effect is best described as _____________ increasing the purchasing power of income, enabling consumers to purchase _____________ of a product and vice versa.

lower prices; more

if the government subsidizes the production of a good, it in effect __________ the producers' costs and __________ supply.

lowers; increases

The added cost of producing one more unit of output is called ____________ cost.

marginal

The demand by a consumer for a good or service essentially reflects the ___________ benefit of the good or service, based on the utility received.

marginal

____________ benefit is the additional utility gained from consuming one more unit of a good or service.

marginal

Buyers and sellers are brought together in a __________________.

market

The interaction between buyers and sellers, which determines equilibrium __________ and _____________, is illustrated by the intersection of the demand and supply curves.

price; quantity

The supply curve illustrates the relationship between:

prices and quantity supplied

A change in __________ causes a movement along the supply curve.

product price

The production of a good or service in the least costly way is known as ___________ efficiency.

productive

Competition among corn producers forces them to use the best technology and right mix of productive resources; otherwise their costs will be too high relative to the market price and they will be unprofitable. This is best described as:

productive efficiency

A change in ____________ causes the supply curve of a product to the shift leftward or rightward.

resource prices

When a factor other than price affects consumption of a good or service, the demand curve can shift ____________ or ____________.

rightward; down

If a decrease in supply is greater than a decrease in demand, equilibrium price will

rise

When the price of one product rises, the demand for its substitute will

rise

Other things equal, as a buyer's incomes rises, the willingness and ability to buy a normal product ____________.

rises

When each additional worker of a firm produces less additional output than previously added workers, then the marginal cost of additional units of output:

rises

When the government provides financial assistance for the production of a good which lowers producers' costs and increases supply, it is called a _____________.

subsidy

The market demand curve is the ___________ of all ___________ demand curves for a good or service.

summation; individual

The market supply curve is the horizontal __________ of all the ___________ supply curves for a good or service.

summation; individual