MICROECONOMICS Chapter 4 Quiz
perfectly competitive
1) the goods offered for sale are all exactly the same 2) the buyers and sellers are so numerous that no single buyer or seller has any influence over the market price
Three Steps to Analyzing Changes in Eq'm
1. Decide whether event shifts S curve, D curve, or both. 2. Decide in which direction curve shifts. 3. Use supply-demand diagram to see how the shift changes eq'm P and Q.
If the price of hot dogs were to decrease, which of the following changes would we expect to occur in the hot dog bun market?
But more buns, shifts right
If the price of hot dogs increases, the demand for hot dog buns will
Decrease, shifts left
In inferior good, if people's incomes go up, they want
Less inferior goods, shifts left.
Number of buyers (decreases)
Less people demand, D curve shifts left
If tastes go away from a good/service
Less people to buy, shifts left
Number of buyers (increases)
More people demand, D curve shifts right
If tastes go toward a good/service
More people will buy, shifts right
Demand for an INFERIOR good is ____ related to income
Negatively related to income
If the price of Pepsi increases then there will be _____ of Pepsi
People who buy more coke, shifts right
If the price of Pepsi decreases,
People will buy more Pepsi and less coke, shifts left
These equilibrium prices are
Signals that guide economic decisions and thereby allocate resources.
In normal goods, if people's incomes go down, they want
Want less normal goods, shift to left.
In inferior goods, if people's incomes go down, they want
Want more goods, shifts right
In normal goods, if people's incomes go up, they want
Want more normal goods, shift to right.
Market
a group of buyers and sellers of a particular good or service.
demand schedule
a table that shows the relationship between the price of a good and the quantity demanded.
Two goods are complements if
an increase in the price of one causes a fall in demand for the other
Two goods are substitutes if
an increase in the price of one causes an increase in demand for the other
quantity demanded
of any good is the amount of the good that buyers are willing and able to purchase.
competitive market
one with many buyers and sellers, each has a negligible effect on price.
Markets are usually a good way to
organize economic activity
Demand for a normal good is __ related to income
positively
In market economies,
prices adjust to balance supply and demand
Law of Demand
the claim that the quantity demanded of a good falls when the price of the good rises, other things equal.
Excess demand
when quantity demanded is more than quantity supplied
