chapter 3

14. if government increased everyones income tax rates to finance more generous benefits for seniors, the demand and supply model would predict a change in equilibrium price and quantity for some commodities because of

a change in the distribution of income with no change in average income

11. a movement along the supply curve could be caused by

a change in the price of a product

5. if goods A and B are complements an increase in the price of good A will lead to

a decrease in demand for good b

16. assuming a downwards sloping demand curve, an improvement in production technology is predicted to lead to

a decrease in equilibrium price and an increase in equilibrium quantity exchanged

a decrease in population causes

a leftward on the the damand curve

fall in income causes

a leftward on the the damand curve

the anticipation of a future price that will decrease the price causes

a leftward on the the damand curve

a rise in the price of a compliment causes

a leftward shift on the the damand curve

fall in the price of a substitute causes

a leftward shift on the the damand curve

a change in taste that disfavors the product causes

a leftward shift on the the demand curve

2. an increase in quantity demand refers too

a movement down along a demand curve

a change in taste that favors that product causes

a rightward shift on demand curve

a fall in the price of a compliment causes

a rightward shift on demand curve

a rise in income causes

a rightward shift on demand curve

a rise in the price of a substitute causes

a rightward shift on demand curve

an increase in population causes

a rightward shift on demand curve

the anticipation of a future event that will increase the price causes

a rightward shift on demand curve

A ______ in price causes a movement ______ and to the _____ along the demand curve, hence quantity demand will fall

a rise in price, upwards and to the left meaning quantity demand will fall

the difference between a shift in the demand curve and a movement along the demand curve

a) A shift is caused by a change is demand b) movement along the demand curve is caused by a change in quantity demand c) a change in quanitity demand can be caused by a shift in the demand curve

How can a rightward shift can be caused on the demand curve, Give 6 examples

a) a rise in income b) a rise in the price of a substitute c) a fall in the price of a compliment d) a change in taste that favors that product e) an increase in population f) the anticipation of a future event that will increase the price

How can a leftward shift can be caused on the demand curve. GIve 5 examples

a) fall in income b) fall in the price of a substitute c) a rise in the price of a compliment d) a change in taste that disfavors the product e) a decrease in population f) the anticipation of a future price that will decrease the price

When there is a leftward shift is the demand curve

a) less desired at each price b) each price corresponds to a lower quantity than it did b4

when there is a right shift in the demand demand curve

a) more is desired at each price b) each price corresponds to a high quantity than it did before

the supply curve represents ...

a) the relationship between quantity supplied and the price b) its positive slope indicates that quantity supplied increases when price increases

How do substitutes in consumption effect the demand curve)

goods that can be used in place of another good to satisfy similar needs - the rise of one price will increase the quantity demand for the other product

How do complements in consumption effect the demand curve

goods that tend to be consumed together - the fall of one price will increase the demand for both products

How does customers income effect the demand curve

if average income rises customers can be expected to desire more of most goods

6. Increased public awareness of the adverse health effects of smoking

is characterized as a change in tasts that leads to a leftwars shift in the demand curve for ciggarets

17. comparative statics

is the analysis of market equilibria under different set of conditions

18. when price exceeds its equilibrium value, the quantity bought and sold

is the quanity demanded

the price of the product and the quantity supplied are related ______ because ...

positively because the high the products own price, the more its producers will supply and the the lower the price the less producers will supply

How does customers income effect the demand curve with inferior goods

quantity demand decreases when income levels rise

How does customers income effect the demand curve with normal goods

quantity demand increases when income levels rise

quantity demand is

quantity demanded at a single point

How does an increase in population demand effect the demand curve

rise for all goods (right shift)

change in supply means a

shift of the whole supply curve

government taxes or subsidies are

special taxes levied on the production of special good such as gasoline cigarets and alcohol

9. a rightward shift in the supply curve indicates

that at each price quanitity supplied has increased

quantity supplied is

the amount of a commodity that producers want to sell during some time period

comparative statistics

the derivation of predictions by analyzing the effects of a change in some exogenous variable on the equilibrium

supply is

the entire relationship between the quantity of some commodity that producer wishes to sell and the price of that commodity

13. excess demand exists whenever

the equilibrium price is above the existing price

what happens to the equilibrium price with an increase in supply

the equilibrium price moves down the demand curve and becomes lower - because an increase in supply means a rightward shift

what happens to the equilibrium price with a decrease in supply

the equilibrium price moves up the demand curve and becomes higher - because an decrease in supply means a leftward shift

change in quantity supplied means

the movement from one point on a supply curve to another point

the number of suppliers are the

the number of firms producing that product and offering it for sale

An increase in demand means that the demand curve shifts to the _______, and hence quantity demanded will be ______ at each price

to the right, with higher quantity demand

excess demand means

upward pressure on price

what happens to the equilibrium price with a decrease in demand

- the equilibrium price moves down the supply curve and becomes lower - because an increase in demand means a leftward shift

what happens to the equilibrium price with an increase in demand

- the equilibrium price moves up the supply curve and becomes higher - because an increase in demand means a rightward shift

prices of inputs are

all things that a firm uses to produce its outputs, such as materials, labour and machines

8. a shift in supply curve will not be caused by

an increase in average customer income

15. an increase in both equilibrium price and quanitity exchange is consistant with

an increase in demand

7. in economics the term inferior goods means that

an increase in income shifts its demand cure inwards to the left

12. when two goods are compliments in production

an increase in the price of one will increase the supply of the other

4. an increase in demand means that

at each price, consumers desire a greater quantity

10. an increase in the price of an input will

b) decraese quantity supplied at each price c) DEACREASE SUPPLY d) cause the supply curve to shift to the left

19. a change is money price of the product, other things consistant is

c) a change in both its relative price and absolute price d) a change in its opportunity cost

shifts in the demand curve are

caused by a change in any variable previously held constant

technology can be described as

change in knowlege or change in weather conditions

prices of other products (suppy)

changes in one effect the other depending on wheather they are substiutes or sompliments

How does a decrease in in population demand will effect demand curve

decrease for all goods (left shift)

for a normal good a decrease in consumer income will result in the

demand curve shifting to the left

excess supply means

downward pressure on price

3. the demand curve and the demand scedual

each reflect a relationship beween quanitity demanded and price, other things equal

the demand curve can be described as the

entire relationship between quantity demand and price, other things being equal