Econ reading ch 2

If there is a subsidy on a good, that subsidy is paid to consumers, and it decreases, this will result in a(n)

decrease in demand.

If the expected price of a good decreases, this will result in a(n)

decrease in supply. increase in demand.

If the population of potential buyers of a good increases, this will result in a(n)

increase in demand.

The shape of the supply curve is

upward sloping.

When the price of a good or service is ______ the equilibrium price there will be shortage but when the price of a good or service is ______ the equilibrium price there will be surplus.

less than; greater than

Select all that apply Ceteris paribus means

other things equal. holding those other factors constant.

The negative relationship between ______ is called the law of demand.

price and quantity demanded

The supply and demand model is used by economists to provide insight into ______ and ______.

price; quantity

Suppose the price of salmon rises so health-conscious consumers choose chicken breast instead. This is an example of the

substitution effect.

If there is an excise tax on a good, that tax is placed on producers, and it changes, it will impact

supply

The positive relationship between price and quantity supplied is called the law of

supply

If good A and good B are alternative outputs for a firm and the price of good A changes, then in the market for good B this will impact

supply.

If the number of sellers producing a good changes, it will impact

supply.

If the technology involved in producing a good changes, it will impact

supply.

If there is a subsidy paid for the production of a good, that subsidy goes to producers, and it changes, this will impact

supply.

The reason that the supply curve is upward sloping is that

the marginal cost of producing more goods is increasing. firms have output alternatives so an increase in price is necessary for them to forgo those

Which of the following are examples of the substitution effect in action?

-The price of salmon is rising so health-conscious consumers choose chicken breast instead. -The price of one cola is rising so consumers choosing another brand instead.

Which of the following occurs when the expected price of a good increases? (Check all that apply.)

An increase in the current demand for the good A decrease in the current supply of the good

Economists, when using models to predict an outcome of a change in one variable while holding all other things constant, use the phrase _______ _________ to acknowledge that is what they are doing.

Blank 1: ceteris Blank 2: paribus

An increase in income for a good that is considered inferior will result in the equilibrium price ____ (increasing/decreasing) and the equilibrium quantity ________ (increasing/decreasing).

Blank 1: decreasing, falling, or dropping Blank 2: decreasing or falling

An increase in income for a good that is considered normal will result in equilibrium price ________ and equilibrium quantity ______.

Blank 1: increasing or rising Blank 2: rising or increasing

One reason that the law of supply makes sense and that supply is upward sloping is that the ____ cost is ______

Blank 1: marginal Blank 2: increasing, upward sloping, or rising

Demand is the relationship between ____ price ,and quantity ______ demanded , ceteris paribus.

Blank 1: price Blank 2: demanded

Fill in the blanks to complete the sentence. In a supply and demand diagram equilibrium represents a _______ _________ combination

Blank 1: price Blank 2: quantity

A decrease in the number of firms selling a good will result in equilibrium price _______and equilibrium quantity________.

Blank 1: rising or increasing Blank 2: falling or decreasing

A decrease in the technology associated with the production of a good will result in equilibrium price _______ and equilibrium quantity _________.

Blank 1: rising or increasing Blank 2: falling or decreasing

The _____ supply ,and _____ model is the most important model in economics.

Blank 1: supply Blank 2: demand

Which of the following represents "how much consumers want to buy at all prices."

Demand

Which of the determinants of demand are also determinants of supply?

Expected price Taxes Subsidies

Identify all of the determinants of demand.

Income Expected price Price of other goods Population of potential buyers Subsidies Taxes Taste

Which of the determinants of demand are subdivided (between normal/inferior; complement/substitute)?

Income Price of other goods

Identify all of the determinants of supply.

Number of sellers Expected price Price of other potential outputs Subsidies Price of inputs Taxes Technology

Which of the following represents "how much consumers are willing and able to buy at a particular price during a particular period of time?"

Quantity demanded

Which of the determinants of supply are also determinants of demand?

Subsidies Expected price Taxes

Which model is considered the most important in all of economics?

Supply and demand

One reason that the law of supply makes sense and that supply is upward sloping is that firms have output alternatives

True

Select all that apply When the price of a good or service is above the equilibrium price there will be

a surplus. excess supply.

A change in the expected price of a good will impact

both supply and demand.

If a particular kind of pants goes out of fashion, this will result in a(n)

decrease in demand.

If income falls and the good is normal, this will result in a(n)

decrease in demand.

If income rises and the good is inferior, this will result in a(n)

decrease in demand.

If the population of potential buyers of a good decreases, this will result in a(n)

decrease in demand.

If good A and good B are alternative outputs for a firm and the price of good A rises, then in the market for good B this will result in a(n)

decrease in supply.

If the technology involved in producing a good decreases, this will result in a(n)

decrease in supply.

If there is a subsidy paid for the production of a good, that subsidy goes to producers, and it decreases, this will result in a(n)

decrease in supply.

If there is subsidy on a good, that subsidy is paid to consumers, and it changes, it will impact

demand

The negative relationship between price and quantity demanded is called the law of . (Enter one word in the blank.)

demand

A change in income for a good will impact

demand, and the direction of the shift will depend on whether the good is normal or inferior.

If a person tells you how much they want to buy at every price from $0 to $100, you have their

demand.

If there is an excise tax on a good, that tax is placed on consumers, and it changes, it will impact

demand.

Where the supply and demand curves cross, the amount that consumers want to buy and the amount firms want to sell are the same. This is called a(n)

equilibrium

When the price of a good or service is below the equilibrium price there will be

excess demand. a shortage.

An increase in the expected future price of a good would cause

firms to hold onto their current inventories. consumers to stock up.

A decrease in the expected future price of a good would cause

firms to sell off their current inventories. consumers to delay their purchase.

If the expected price of a good increases, this will result in a(n)

increase in current demand. decrease in current supply.

If good A and good B are substitutes and the price of good A rises, then in the market for good B this will result in a(n)

increase in demand

If income falls and the good is inferior, this will result in a(n)

increase in demand

If income rises and the good is normal, this will result in a(n)

increase in demand

If a particular kind of beverage becomes fashionable, this will result in a(n)

increase in demand.

If good A and good B are complements and the price of good A falls, then in the market for good B this will result in a(n)

increase in demand.

If there is a subsidy on a good, that subsidy is paid to consumers, and it increases, this will result in a(n)

increase in demand.

If there is an excise tax on a good, that tax is placed on consumers, and it decreases, this will result in a(n)

increase in demand.

If good A and good B are alternative outputs for a firm and the price of good A falls, then in the market for good B this will result in a(n)

increase in supply.

If the number of sellers producing a good increases, this will result in a(n)

increase in supply.

If there is an excise tax on a good, that tax is placed on producers, and it decreases, this will result in a(n)

increase in supply.

If there is a decrease in the expected future price of a good, this will result in a(n):

increase in the current supply for the good. decrease in the current demand for the good.