MICRO: CH. 3 Demand, Supply, and Market Equilibrium
If two goods are complements:
a decrease in the price of one will increase the demand for the other.
Economists use the term "demand" to refer to:
a schedule of various combinations of market prices and amounts/quantities demanded.
Refer to the diagram. A price of $60 in this market will result in:
a surplus of 100 units.
A surplus of a product will arise when price is:
above equilibrium with the result that quantity supplied exceeds quantity demanded.
Blu-ray players and Blu-ray discs are:
complementary goods
A shift to the right in the demand curve for product A can be most reasonably explained by saying that:
consumer preferences have changed in favor of A so that they now want to buy more at each possible price.
There will be a surplus of a product when:
consumers want to buy less than producers offer for sale.
If X is a normal good, a rise in money income will shift the:
demand curve for X to the right.
Refer to the diagram, in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves. In this market:
demand has increased and equilibrium price has decreased.
The relationship between quantity supplied and price is _____ and the relationship between quantity demanded and price is _____.
direct; inverse
A price floor means that:
government is imposing a minimum legal price that is typically above the equilibrium price.
A market is in equilibrium:
if the amount producers want to sell is equal to the amount consumers want to buy.
Refer to the diagram. A decrease in demand is depicted by a:
shift from D2 to D1.
Refer to the diagram. A decrease in supply is depicted by a:
shift from S2 to S1.
An improvement in production technology will:
shift the supply curve to the right.
If the price of product L increases, the demand curve for close-substitute product J will:
shift to the right.
Refer to the diagram. A price of $20 in this market will result in a:
shortage of 100 units.
A leftward shift of a product supply curve might be caused by:
some firms leaving an industry.
A market:
is an institution that brings together buyers and sellers.
Refer to the diagram. A decrease in quantity demanded is depicted by a:
move from point y to point x.
Refer to the diagram. A government-set price ceiling is best illustrated by:
price A.
Refer to the diagram. A government-set price floor is best illustrated by:
price C.
The demand curve shows the relationship between:
price and quantity demanded
The law of supply indicates that, other things equal:
producers will offer more of a product at high prices than at low prices.
Allocative efficiency is concerned with:
producing the combination of goods most desired by society.
Other things equal, if the price of a key resource used to produce product X falls, the:
product supply curve of X will shift to the right.
An effective ceiling price will:
result in a product shortage.
An effective price floor will:
result in a product surplus.
When the price of a product rises, consumers with a given money income shift their purchases to other products whose prices are now relatively lower. This statement describes:
the substitution effect.
Productive efficiency refers to:
the use of the least-cost method of production.
At the equilibrium price:
there are no pressures on price to either rise or fall.
Refer to the diagram. The equilibrium price and quantity in this market will be:
$1.00 and 200.
Refer to the diagram. If this is a competitive market, price and quantity will move toward:
$40 and 150, respectively.
Refer to the diagram. The highest price that buyers will be willing and able to pay for 100 units of this product is:
$60.
Refer to the diagram, which shows demand and supply conditions in the competitive market for product X. If the initial demand and supply curves are D0 and S0, equilibrium price and quantity will be:
0F and 0C, respectively.
If the demand curve for product B shifts to the right as the price of product A declines, then:
A and B are complementary goods.
Which of the following will cause the demand curve for product A to shift to the left?
An increase in money income if A is an inferior good.
Other things equal, which of the following might shift the demand curve for gasoline to the left?
The development of a low-cost electric automobile.
Which of the following would most likely increase the demand for gasoline?
The expectation by consumers that gasoline prices will be higher in the future.
Which of the following is most likely to be an inferior good?
Used clothing.
Refer to the diagram, in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves. In this market:
an increase in demand has been more than offset by an increase in supply.
An economist for a bicycle company predicts that, other things equal, a rise in consumer incomes will increase the demand for bicycles. This prediction assumes that:
bicycles are normal goods.
When the price of a product increases, a consumer is able to buy less of it with a given money income. This describes the:
income effect.
A government subsidy to the producers of a product:
increases product supply.
Tennis rackets and ballpoint pens are:
independent goods.
College students living off-campus frequently consume large amounts of ramen noodles and boxed macaroni and cheese. When they finish school and start careers, their consumption of both goods frequently declines. This suggests that ramen noodles and boxed macaroni and cheese are:
inferior goods.
Price floors and ceiling prices:
interfere with the rationing function of prices.
In presenting the idea of a demand curve, economists presume the most important variable in determining the quantity demanded is:
the price of the product itself.
If there is a shortage of product X, and the price is free to change:
the price of the product will rise.
At the point where the demand and supply curves for a product intersect:
the quantity that consumers want to purchase and the amount producers choose to sell are the same.
