Module 3 Test

When quantity demanded is less than quantity supplied, price will _____ causing quantity demanded to ______ and quantity supplied to _______

1. fall 2. increase 3. decrease

A price ceiling is a legislated price that is

below the market equilibrium price

If the price of oranges, a substitute for apples, increases. what will happen to the demand for apples?

demand for apples will increase

When the price of hot dogs decreases, what happens in the market for the complementary good of hot dog buns?

demand increases, increasing price and quantity

If consumers expect the price of a product to be higher In the future, what will happen to the demand for the product today?

demand will increase

The relationship between price and quantity supplied is typically

direct

If income decreases and consumers purchase more of a product, the product is considered to be a/an ________

inferior good

With inelastic demand, consumers are relatively sensitive to changes in prices.

insensitive

The relationship between price and quantity demanded typically is _______

inverse

With elastic demand, the percentage change in quantity is __________ the percentage change in price.

larger than

In the market for cell phones, if the supply of cell phones increases what will happen to the price and quantity of cell phones?

price will decrease and quantity will increase

What is the relationship between quantity demanded and supplied at equilibrium?

quantity demanded equals quantity supplied

If the cost of production of Hula Hoops increases the supply curve will

shift to the left

Price floors create

surpluses

Economic demand is

the amount of a good or service that consumers are willing and able to buy at various prices.