Micro Chapter 3 Supply and Demand

According to the video, what proportion of college and university faculty currently are "adjuncts"?

50%

demand curve

A graphical illustration of the law of demand, which shows the relationship between the price of a good and the quantity demanded.

supply curve

A graphical illustration of the law of supply, which shows the relationship between the price of a good and the quantity supplied.

price system

A name given to the market economy because prices provide considerable information to both buyers and sellers.

substitute goods

Goods consumers will substitute for one another. When the price of one good rises, the demand for the other good increases, and vice versa.

complementary goods

Goods that are typically consumed together. When the price of a complementary good rises, the demand for the other good declines, and vice versa.

law of demand

Holding all other relevant factors constant, as price increases, quantity demanded falls, and as price decreases, quantity demanded rises.

law of supply

Holding all other relevant factors constant, as price increases, quantity supplied rises and as price declines, quantity supplied falls.

supply

The maximum amount of a product that sellers are willing and able to provide for sale over some time period at various prices, holding all other relevant factors constant (the ceteris -paribus condition).

equilibrium quantity

The output that results when quantity demanded is just equal to quantity supplied.

equilibrium price

The price at which the quantity demanded is just equal to quantity supplied.

horizontal summation

The process of adding the number of units of the product purchased or supplied at each price to determine market demand or supply.

According to the law of demand, an increase in the price of a product will lead to which result?

The quantity demanded will decrease.

In 2010, frost badly damaged the tomato crop in Florida. The crop loss caused tomato prices to increase. According to the law of demand, what will happen to the quantity demanded for tomatoes based on this price change?

The quantity demanded will decrease.

According to the law of demand, a decrease in the price of a product will lead to which result?

The quantity demanded will increase.

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.

A change in tastes that decreases people's desire for a good will cause:

a leftward shift in the demand curve.

An institution that enables buyers and sellers to interact and transact with one another is called:

a market.

A change in price that increases the quantity demanded of a good will cause:

a movement downward along the demand curve.

A recession can cause some firms in a particular market to go out of business. How would this be illustrated on a supply and demand graph?

a new supply curve to the left of the original curve

An increase in the price of oil can make it more costly to produce a good or service that is dependent on oil. How would this be illustrated on a supply and demand graph of a product dependent on oil?

a new supply curve to the left of the original curve

All markets have the same basic component, which is:

a transaction.

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.

A decrease in subsidies on the production of a good would cause the supply curve for that good to shift:

to the left.

Fewer sellers of a product would cause the supply curve for that product to shift:

to the left.

A decrease in tax on the sale of a good would cause the supply curve for that good to shift:

to the right.

The law of demand states that

while holding all other relevant factors constant, as price decreases, quantity demanded rises.

Demand is defined as the amount of a product that buyers are __________ to purchase over some period at various prices.

willing and able

According to the video, what proportion of college and university faculty were tenured or tenure-track in 1970?

80%

inferior good

A good for which an increase in income results in declining demand.

normal good

A good for which an increase in income results in rising demand.

The market economy is also called the __________ system.

price

demand schedule

A table that shows the quantity of a good a consumer purchases at each price.

willingness-to-pay

An individual's valuation of a good or service, equal to the most an individual is willing and able to pay.

In the video, what does BATNA stand for?

Best Alternative To a Negotiated Agreement.

markets

Institutions that bring buyers and sellers together, so they can interact and transact with each other.

Which "irrational" negotiation tactics were written on the board in the video

Insults, extreme offer, threats

On a graph of the supply and demand of Ph.D. labor, people holding Ph.D.s represent:

Labor supply.

equilibrium

Market forces are in balance when the quantities demanded by consumers just equal the quantities supplied by producers.

On a graph of the supply and demand of Ph.D. labor, people holding Ph.D.s who drop out of the market because of low wages are an example of:

Movement along the labor supply curve to the left.

determinants of demand

Nonprice factors that affect demand, including tastes and preferences, income, prices of related goods, number of buyers, and expectations.

determinants of supply

Nonprice factors that affect supply, including production technology, costs of resources, prices of related commodities, expectations, number of sellers, and taxes and subsidies.

change in demand

Occurs when one or more of the determinants of demand changes, shown as a shift in the entire demand curve.

change in supply

Occurs when one or more of the determinants of supply change, shown as a shift in the entire supply curve.

surplus

Occurs when the price is above market equilibrium, and quantity supplied exceeds quantity demanded.

shortage

Occurs when the price is below market equilibrium, and quantity demanded exceeds quantity supplied.

change in quantity demanded

Occurs when the price of the product changes, shown as a movement along an existing demand curve.

change in quantity supplied

Occurs when the price of the product changes, shown as a movement along an existing supply curve.

The concept of BATNA in the video is closely related to what economic concept?

Opportunity cost.

Roger McMillan is an Olympic runner who is sponsored by Nike. If Roger was to win the gold medal, then demand for Nike shoes would increase. If Roger wins the gold medal and Nike does not increase its supply of shoes, then what will happen to the price of Nike shoes according to the model of supply and demand?

Prices will increase.

According to the video, the economic approach to negotiation would:

Take costs and benefits into consideration.

demand

The maximum amount of a product that buyers are willing and able to purchase over some time period at various prices, holding all other relevant factors constant (the ceteris paribus condition).

Suppose that the supply of oil and the demand for oil both increase next year. What will happen to the equilibrium price?

There is not enough information to determine what will happen to the equilibrium price of oil.

The demand curve for coffee in the coffee market is likely:

a downward sloping line.

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.

If an increase in the price of one good causes a decrease in demand for another, the two goods are called _____ goods.

complementary

According to Robert Mnookin, negotiations are often periods of ___ rather than ____.

emotion; rationality

A surplus of a good will typically cause the price of that good to:

fall

If the supply of a good increases and the demand stays the same, price will: Please choose the correct answer from the following choices, and then select the submit answer button.

fall

If the demand for a good decreases and the supply stays the same, price will:

fall.

Prices are used to provide __________ between buyers and sellers.

information

According to the video, a positive result of increased reliance on adjunct faculty is _____, while one negative result is _____.

lower tuition rates; higher expenditures on public assistance

An institution that enables buyers and sellers to interact and transact with one another is called a:

market

The market equilibrium price exists when:

quantity supplied and quantity demanded are equal.

If a decrease in the price of one good causes a decrease in the demand for another, the two goods are called _____ goods.

substitute

If a price increase for one good causes an increase in 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

The "oversupply" of people with Ph.D. degrees is an example of a market ____, likely caused in part by _____.

surplus; increased supply