LC Chapter 3
Starting from point E, which point is the most likely outcome of a decrease in the price of a substitute good, holding all else constant?
B
Which of the following illustrates an inferior good?
Cassie eats less macaroni and cheese because she received a large year-end bonus at work.
The demand for skateboards increases but supply stays the same. What would happen to the equilibrium price in this situation?
Equilibrium price would increase.
According to the law of demand, an increase in the price of a product will lead to which result?
The quantity demanded will decrease.
According to the law of supply, if the price of cars decreases, what will happen to the quantity of cars supplied?
The quantity supplied will decrease.
According to the law of supply, if the price of cars increases, what will happen to the quantity of cars supplied?
The quantity supplied will increase.
According to the law of demand, a decrease in the price of a product will lead to which result?
`The quantity demanded will increase.
Starting from point E, which point is the outcome of a decrease in the price of a complementary good, holding all else constant?
a
An institution that enables buyers and sellers to interact and transact with one another is called:
a market.
In February 2011, unrest in the Ivory Coast and other African countries threatened to reduce the supply of cocoa beans used to make chocolate. If the price of chocolate increased, the result would be:
a movement along the same demand curve from one point to a higher point on the curve.
A change in price that increases the quantity demanded of a good will cause:
a movement downward along the demand curve.
The horizontal distance between the demand curve and the supply curve at a price below the equilibrium point represents:
a shortage.
According to the following figure, a price of $50 would lead to:
a surplus of 6.
The horizontal distance between the demand curve and the supply curve at a price above the equilibrium point represents:
a surplus.
All markets have the same basic component, which is:
a transaction.
To find the market supply of a good or service, economists:
add together the quantities each producer would produce at each price.
To find the market demand for a good or service, economists:
add together the quantities of a good or service each consumer would buy at each price.
A shortage is represented by the distance:
between the demand curve and the supply curve at a price below the equilibrium point.
The demand for skateboards decreases but supply stays the same. What would happen to the equilibrium price in this situation?
equilibrium price would decrease
If a decrease in income causes an increase in the demand for a good, then the good is called a(n) _____ good.
inferior
Prices are used to provide __________ between buyers and sellers.
information
An institution that enables buyers and sellers to interact and transact with one another is called a:
market
The market economy is also called the __________ system.
price
Market equilibrium quantity exists where:
quantity supplied and quantity demanded are equal.
The market equilibrium price exists when:
quantity supplied and quantity demanded are equal.
The market price would be likely to rise when:
quantity supplied is less than quantity demanded.
If a decrease in the price of one good causes a decrease in the demand for another, the two goods are called _____ goods
substitute
More sellers of a product would cause the _____ curve for that product to shift to the right.
supply
Because prices contain useful information for buyers and sellers, the market economy is sometimes called:
the price system.
Prices provide information:
to buyers and sellers.
Demand is defined as the amount of a product that buyers are __________ to purchase over some period at various prices.
willing and able
