ECO 2023 ch.4 learnsmart
when the market participants of a market that is in disequilibrium respond to rising prices, the market will return to equilibrium, resulting in:
an elimination of a shortage
shortages:
are usually the product of price controls
a maximum legal price that is set below the equilibrium price is a ___ price ceiling
binding
a minimum legal price that is set above the market price is called a
binding price floor
in order for a price floor to be:
binding, the price floor must be set above the equilibrium price
we can determine how price or quantity will change, but not both, when:
both demand and supply change
when a tax is imposed on a market:
both producers and consumers are affected, no matter who pays the tax
when a shortage exists in a competitive market, the price provides incentives for:
buyers to decrease the quantity of a good or service purchased in the market
a maximum legal price at which a good, service, or resource can be sold is called a price ___
ceiling
when both demand and supply change, the:
change in either the equilibrium price of quantity will be indeterminate
a price floor will:
change the incentives that both buyers and sellers face
non-price determinants are ___ for any given demand curve
constant
non-price determinants are held ___ for any given supply curve
constant
the quantity traded when the quantity supplied of a good, service, or resource equals the quantity demanded is the ___ quantity
equilibrium
when the quantity supplied of a good, service, or resource equals the quantity demanded, this quantity traded is known as the:
equilibrium quantity
a surplus is sometimes called:
excess supply
a $1.01 tax on every pack of cigarettes sold is an example of an ___ tax
excise
the tax on a good or service that depends on the units sold - not the price of the good or service is called ___ tax
excise
consider the market for jobs. firms demand jobs, and workers supply jobs
false
A price fixed above equilibrium that changes the incentives that both buyers and sellers face is called price ___
floor
a minimum legal price at which a good, service, or resource can be sold is a price ___
floor
a policy designed to ensure that sellers receive a minimum price that is greater than what would be available at the market is a price ___
floor
taxes on products:
generally result in fewer products being purchased
the non-price determinants or other factors that affect demand are:
held constant for any given demand curve
the nonprime determinants or other factors that affect demand are:
held constant for any given demand curve
the non-price determinants or other factors that affect supply are:
held constant for any given supply curve
shortages and surpluses are represented by the:
horizontal distance between the quantity demanded and the quantity supplied
in the market for labor:
households are on the supply side, and firms are on the demand side
the role of government in market economies include all the following except:
identifying new markets
when a shortage occurs in a competitive market, there is an incentive for suppliers to ___ the quantity of a good or service supplied to the market
increase
a tax:
increases the price of goods sold
when a shortage is eliminated, the market
returns to an equilibrium where the quantity supplied equals the quantity demanded
the quantity traded times the tax equal the tax ___
revenue
price floors are designed to make sure that:
sellers receive a minimum price that is greater than what would be available at the market
a ___ is usually the product of price controls that do not allow markets to adjust to unforeseen events that disrupt supply
shortage
suppliers have an incentive to increase quantity supplied when there is a ___ in a competitive market
shortage
when a ___ exists in a. competitive market buyers want to purchase more of a good or service than is supplied
shortage
a tax on suppliers shifts the:
supply curve to the left
a situation in which the quantity of output supplied is greater than the quantity of output demanded at the current market price is called a ___
surplus
when the government sets the price below market equilibrium, a ___ will result
surplus
one way to reduce the quantity demanded for cigars would be to impose a ___ on cigars
tax
to pay for needed services, governments often ___ economic activity
tax
by changing the prices that buyers and sellers face in the market
taxes change market outcomes
when the government imposes a new tax (or increases an existing tax),
the amount that consumers pay increases
in the presence of a tax on suppliers
the cost producing the good or service increases
when a tax is imposed on buyers, what happens in the market
the demand curve shifts to the left
the relative magnitudes of the changes in a demand and supply will determine:
the direction of change in price or quantity when both demand and supply shift
when there is a decrease in both demand and supply:
the equilibrium quantity falls, but the change in the equilibrium price is indeterminate
when the supply of a good increases
the good becomes less expensive, certain paribus
which of the following is a benefit from imposing a tax on a good or service
the government raises revenue to fund government activities
which of the following is a benefit from imposing a tax on a good or service
the government raises to fund government activities
increased scarcity and inefficiency will result when:
the market is in disequilibrium
the price that consumers pay and that producers receive exactly balances the marginal benefit and marginal cost of consuming and producing a good or service when:
the market is in equilibrium
a good once unaffordable to most people can become an item that almost everyone owns when:
the market supply increases over time
the lowest wage firms can legally pay employees in the labor market
the minimum wage
the most common form of price floor is:
the minimum wage
when a tax is placed on a good:
the price paid by consumers rises, but the price received by producers decreases
a shortage occurs when:
the quantity of output demanded is greater than the quantity of output supplied at the current market price
when the price of a good, service, or resource decreases
the quantity supplied decreases
when the price of a good, service, or resource increases:
the quantity supplied increases
when the price of a good increases:
the quantity supplied rises
when a good or service is taxed in the market
the quantity traded in the market falls
when a good or service is taxed in the market:
the quantity traded in the market falls
when a nonprime determinant of supply changes
the relationship between the quantity supplied and the price changes
when there is a change in a non-price determinant of supply:
the supply curve shifts and there is a movement along the demand curve
the quantity traded times the tax equals:
the tax revenue from a tax
which of the following statements are true
a binding price floor will be higher than a nonbonding price floor
a change in the quantity demanded at each price is:
a change in demand
a nonprime determinant of demand is:
a characteristic of demand for a good, service, or resource other than its own market price
an excise tax is a tax on:
a good or service that depends on the units sold
a price ceiling is:
a maximum legal price at which a good, service, or resource can be sold
a binding price ceiling is:
a maximum legal price set below the equilibrium price
a nonbonding price ceiling is:
a maximum legal price that is not set below the equilibrium price
a price floor is:
a minimum legal price at which a good, service, or resource can be sold
a binding price floor is:
a minimum legal price set above the equilibrium price
a nonbonding price floor is:
a minimum legal price that is not set above the equilibrium price
a characteristic of demand for a good, service, or resource other than its own market price is:
a nonprime determinant of demand
the market adjusts to a new equilibrium price and quantity when:
a nonprime determinant of supply changes
a decrease in supply is:
a shift to the left
an increase in supply is:
a shift to the right
the equilibrium quantity increase and the equilibrium price is indeterminate when:
demand and supply both increase
the nonprime determinants or other factors that affect demand are held constant for any given:
demand curve
a tax on demanders shifts the:
demand curve to the left
the equilibrium price decreases and the equilibrium quantity is indeterminate when:
demand decreases and supply increases
the equilibrium price increases and the equilibrium quantity is indeterminate when:
demand increases and supply decreases
the quantity supplied of a good, service, or resource equals the quantity demanded at the ___ quantity
demanded
when both demand and supply shift, the direction of change in price or quantity:
depends on the relative magnitudes of the changes in demand and supply
the market adjusts to a new equilibrium price and quantity when a non-price ___ of supply changes
determinant
___ results in increased scarcity and inefficiency in the production of a good or service
disequilibrium
the role of government in market economics includes:
enforcing contracts determine the rules of commerce defining and enforcing property rights punishing dishonest behavior
the market-clearing price is the same as the ___ price
equilibrium
the price that balances demand and supply is called the ___ price
equilibrium
the quantity traded when the quantity supplied of a good, service, or resource equals the quality demanded is the ___ quantity
equilibrium
if both demand and supply change simultaneously, the effect on either price or quantity will be ___
indeterminate
when a minimum wage results in unemployment, people may turn to ___ markets to provide their labor
informal
the statement "households are on the supply side, and firms are on the demand side" is with reference to which market
labor
the statement "households are on the supply side, and firms are on the demand side." is with reference to which market
labor
when the market is in equilibrium, the price that consumers pay and that producers receive exactly balances the
marginal benefit and marginal cost of consuming and producing a good or service
when price ceilings are in effect
market participants have a strong incentive to work around the laws
the lowest wage that firms can legally pay employees in the labor market is the ___ wage
minimum
The lowest wage that firms can legally pay employees in the labor market is the ___ wage
miniumum
a minimum legal price that is not set above the equilibrium price is a ___ price floor
non binding
a minimum legal price that is set below the market price is called a
non-binding price
a minimum legal price that is set below the market price is called a
non-binding price floor
the minimum legal price that is set below the market price is called a
non-binding price floor
a tax explicitly paid by the demanders of a product is one:
paid at the time of sale
when a minimum wage results in unemployment:
people may turn to informal markets to provide their labor
other things remaining constant, when a good's ___ falls, its quantity supplied falls
price
when the ___ of a good changes, the quantity demanded changes
price
shortages cannot push the market to an equilibrium in the presence of:
price controls
the federal minimum wage is an example of a
price floor
a shortage persists when:
price is now allowed to adjust upward
when a shortage is eliminated:
quantity supplied equals quantity demanded
when there is a shortage in the market, consumers tend to:
reduce the quality consumed
other things remaining constant - an increase or decrease in the quantity supplied of a good at every price is:
reflected by a shift of the supply curve
a change in a nonprime determinant of supply will:
result in a shift of the supply curve
when the supply curve shifts to the right or left:
there has been a change in the non-price determinants of supply
when the quantity supplied is equal to the quantity demanded of the good
there is an equilibrium
which of the following occurs when the price of a good increases
there is an increase in the quantity supplied
the equilibrium price is indeterminate when:
there is an increase or decrease in both demand and supply
the primary reason that governments tax economic activity is:
to generate the revenue needed to pay for services
when a tax is imposed on a product, it affects both the quantity supplied and the quantity demanded
true
when both demand and supply change:
we can always determine with confidence how price or quantity will change - but not both
when both demand and supply change simultaneously
we can determine the effect on either price or quantity, but not both
suppose demand and supply both shift simultaneously. if we know the direction of the shifts, but not the relative magnitude of the shifts, then
we will know the effect on either the price or the quantity but not both
consider the market for jobs. ___ are the demand of jobs, and ___ are the suppliers of jobs
workers; firms
consider the market for labor. ___ are the demanders of labor, and ___ are the suppliers of labor
workers; firms
if price was not allowed to adjust, a shortage:
would persist, and the market would not return to equilibrium
