Microeconomics chapter 3

Which of the following are the characteristics of a competitive market?

-Standardized products -A large number of buyers and sellers

Choose all of the following that will cause a change in supply, not quantity supplied.

-Technology -Producer expectations -Number of sellers

Which of the following are determinants of supply?

-Technology -Resource prices -Taxes and subsidies

Which of the following specifically refers to demand?

The buyer side of any market

What is the price where the intentions of buyers and sellers match?

The equilibrium price

What determines market price and equilibrium output in a market?

The interaction of buyers and sellers

True or false: Resource costs or changes in the costs of production are responsible for shifts of the supply curve

True

A decrease in demand while holding supply constant results in ______ in both equilibrium price and quantity.

a decline

A decrease in demand while holding supply constant results in _______.

a decrease in both equilibrium price and quantity

The effects on equilibrium price and quantity due to an increase in supply and a simultaneous decrease in demand are shown by ______.

a decrease in equilibrium price and an indeterminate change in equilibrium quantity

The inverse relationship between price and quantity demanded can be graphically illustrated by ______.

a downward sloping curve

The government may place legal limits on prices when it is determined that prices are unfairly ______ for buyers or unfairly ______ for sellers.

high; low

In general, a firm will ______ (increase/decrease) the output of a good or service if the price of the good is rising.

increase

A decrease in supply while holding demand constant results in a(n) ______ in equilibrium price, and a(n) ______ in equilibrium quantity.

increase; decrease

A favorable change in consumer tastes and preferences for a product will _______ demand, shifting the demand curve to the _________

increase; right

The vast majority of goods that are not related to one another are called ______ goods.

independent

A demand curve shows the ______.

inverse relationship between price and quantity demanded for a product

A price ceiling is the maximum legal price a seller may charge for a product or service where a price at or below the ceiling is ______ and a price above the price ceiling is ______.

legal; illegal

If costs of production rise, the producer has an incentive to produce ______ output.

less

On a simple supply model, a change in quantity supplied is illustrated by a ______ and a change in supply is illustrated by a ______.

movement along the supply curve; shift of the supply curve

The relationship between the price of a good or service and the quantity demanded of that good or service described by the law of demand is

negative

The determinants of the supply of a good are any factors other than the product's ______ that cause the supply curve of the good to shift.

price

When drawing a supply curve, _____ is labeled on the vertical axis.

price

All competitive markets involve which of the following?

price supply demand quantity

The supply curve illustrates the relationship between ______.

price and quantity supplied

All the following are the determinants of demand except ______.

price of substitutes in production

The production of a good or service in the least costly way is known as ______ efficiency.

productive

Competition among corn producers forces them to use the best technology and right mix of productive resources; otherwise their costs will be too high relative to the market price and they will be unprofitable. This is best described as ______.

productive efficiency

The price of ______ goods is a determinant of demand.

related

A ______ the demand curve represents a change in demand while a ______ the demand curve represents a change in the quantity demanded.

shift of; movement along

The supply curve measures quantity ______ on the horizontal axis and ______ on the vertical axis.

supplied; price

A change in ____ rather than a change in the quantity supplied, means a change in the schedule or a shift of the supply curve.

supply

A change in ______ , rather than a change in the quantity supplied, means a change in the schedule or a shift of the supply curve.

supply

Market _______ is a schedule or curve showing the various amounts of a product that producers are willing and able to make available for sale at each possible price during a specific period.

supply

The ability of the competitive forces of supply and demand to establish a price at which selling and buying decisions are consistent is called ______.

the rationing function of prices

Which of the following in the rental market for housing benefits renters, but makes it unprofitable for suppliers or landowners?

A price ceiling

A price at or above the price floor is illegal.

false

According to the law of demand, which of the following statements are true, all other things being equal?

-As price decreases, quantity demanded increases. -As price increases, quantity demanded decreases.

Which of the following are determinants of demand?

-Prices of related goods -Number of buyers -Consumer income -Consumer tastes -Consumer expectations

Which of the following would likely increase the demand for a normal good?

-An increase in the number of buyers -A decrease in the price of complementary goods

In the marketplace, what is a good that is used together with another good?

A complementary good

______,while holding demand constant, results in an increase in the equilibrium price of the good, but a decrease in the equilibrium quantity of the good.

A decrease in the supply of a good

A decrease in equilibrium price and indeterminate result on equilibrium quantity is a result of which of the following?

An increase in supply and a simultaneous decrease in demand

Which of the following is likely to cause an increase in the demand for a good or service?

An increase in the number of buyers

Which of the following shows the effects on equilibrium price and quantity due to an increase in supply and a simultaneous decrease in demand?

Equilibrium price falls and the change in equilibrium quantity is indeterminate.

Which of the following is a determinant of demand?

Income

What are two goods called when a change in the price of one good has little or no effect on the demand for the other?

Independent goods

The equilibrium price where the quantity demanded equals the quantity supplied is otherwise known as the _____ ________ price.

Market clearing

Which of the following has the greatest effect on the quantity supplied?

Price

In which of the following situations do governments intervene to prevent prices from rising above or falling below their equilibrium levels?

Prices are too high for consumers. Prices are too low for firms.

Which of the following types of goods affect the demand for another product due to a change in their price?

Substitute goods Complementary goods

The rationing function of prices refers to the ability of the competitive forces of supply and demand to establish a price at which ______.

buying and selling decisions are consistent

A price _____ is the maximum legal price a seller may charge for a product or service.

ceiling

Price controls or ______ mandated in the apartment rental market benefit the consumer by establishing a price ______ the free market equilibrium price.

ceilings; below

The concept of demand can be summarized by a schedule or curve showing the quantity of a product that would be ______.

consumed at various possible prices

One of the determinants of demand is ______ expectations.

consumer

A change in the number of buyers is a determinant of market ________

demand

According to the law of supply, price and quantity supplied have a(n) ______ relationship.

direct

The interaction between buyers and sellers determines the equilibrium price and the _______ quantity.

equilibrium