chapter 2 smartbook

Producer surplus is:

the difference between market price and the minimum price producers would accept to supply each unit of a good

A table, graph, or equation that shows how quantity supplied is related to product price, holding fixed the five other variables that influence supply is called

the direct supply function, or supply

The general supply function is

the relation between the quantity supplied and the six factors that jointly affect quantity supplied1

Which of the following is likely to cause a change in the supply of a good when other variables remain constant?

A change in the number of producers in the industry A change in the expectations of producers about future prices A change in the level of available technology A change in the price of the good itself

Ceteris paribus, which of the following is likely to cause a change in the quantity demanded of a good?

A change in the price of a related good A change in the price of the good A change in the income of consumers

If the number of firms in the industry or the productive capacity of the firms decreases, _________ of the good or service will be supplied.

LESS

___________ is the amount of a good or service offered for sale during a given period of time.

Quantity supplied

A change in demand occurs because

a variable affecting demand other than price changes.

If supply increases and demand decreases, the equilibrium price will _____ and the equilibrium quantity will _____.

decrease, change in an indeterminate way

If demand decreases while supply remains the same, equilibrium price will _________ and equilibrium quantity will ________.

decrease; decrease

If supply increases and demand remains the same, equilibrium price will __________ and equilibrium quantity will __________.

decrease; increase

The law of demand states that quantity demanded of a good ______ when the price of the good ______.

decreases, increases increases, decreases

A price ceiling will likely result in

excess demand

A price floor will likely result in

excess supply

True or false: Consumer surplus can be seen on a market graph as the area below the demand curve and above the supply curve.

f

The _____ demand curve is expressed as Qd = f(P, M, PR, Τ, PF, N).

general

The demand curve is expressed as Qd = f(P, M, PR, Τ, PE, N).

general

The direct supply function can be stated as a(n)

graph table equation

A(n) ___________ in supply is caused by a change in a determinant of supply that increase quantity at every price.

increase

If supply decreases and demand remains the same, the equilibrium price will _____ and the equilibrium quantity will _____.

increase; decrease

If demand increases while supply remains the same, equilibrium price will _________ and equilibrium quantity will ________.

increase; increase

Which of the following will cause the demand curve for a good to shift when other variables remain constant?

A change in the price of a substitute good A change in consumer income A change in the price of a complementary good A change in the taste of consumers

Which of the following is likely to cause a rightward shift of the demand curve for a good?

An increase in the demand for the good

Which of the following are variables that influence the quantity supplied of a good?

The prices of the good itself The level of available technology The expectations of producers about the future price of the good

Ceteris paribus, a decrease in the price of a good is represented by a(n):

downward movement along the demand curve of the good.

The amount of a good bought and sold at market equilibrium is

equil quant

Market clearing price is another name for

equilibrium price

A recent scientific report states that eggs are a good source of protein and help reduce the risks of some cancers. After the report got published, it is being observed that the demand for eggs has: Multiple choice question.

increased, other things remaining constant

An increase in supply is a change in a determinant of supply that __________ the quantity supplied at every price.

increases

When income decreases, consumers will increase the quantity they demand of a(n) __________ good.

inferior

When income decreases, consumers will increase their quantity demanded of a(n) good.

inferior

Equilibrium price is the price at which the quantity supplied ___________ the quantity demanded.

is equal to

The _________ parameter measures the change in quantity demanded per a unit change of the variable.

slope

is the state of knowledge concerning the combination of resources to produce goods and services.

technology

The demand curve will shift when

a demand variable other than price changes

A decrease in demand is

a leftward shift of the demand curve

An decrease in demand is illustrated by

a shift of the demand curve to the left

Consumers who expect that the price of a good will decrease in the future, they will likely _________ their demand for the good in the current period.

decrease

If the firm expects the price of a good they produce to rise in the future, they will likely __________ the amount of the good on the market now.

decrease

Suppose cupcakes and cookies are substitutes. If the price of cupcakes decreases, the demand for cookies will _____.

decrease

Two goods are substitutes if a(n) __________ in the price of one of the goods causes consumers to demand less of the other good, holding all other factors constant.

decrease

Quantity supplied of a good will increase when the price of an input to the production of that good

decreases

When the price of an input to the production of a good increases, the quantity supplied of that good

decreases

The __________ price is the maximum price consumers will pay for a specific amount of a good or service.

demand

A graph showing the relationship between the quantity demanded and the price is called a(n)

demand curve

Economic value is the maximum amount any buyer in the market is willing to pay for the unit, which is measured by the

demand price

A ____________ shows a list of several prices and the quantity demanded per period of time at each of the prices, holding all variables other than price constant.

demand schedule

The __________ are variables that change the quantity demanded at each price and determine where the demand curve is located.

determinants of demand

Consumer surplus is the ___________ the economic value of the good and the price.

difference between

The price at which market equilibrium occurs is the

equilibrium price

True or false: Economists and market researchers often express the general demand function as the relationship only between price and quantity.

false

A direct demand function is an equation that shows

how quantity demanded is related to product price

An improvement in technology available for the production process will _________ the supply of the good in the market.

increase

If automakers announce price increases for vehicles in the next model year, demand for the current year's vehicles should

increase

If the price of Toyotas increases, the demand for Chryslers will:

increase

The law of demand says that quantity demanded will _________ when prices fall.

increase

Two goods are substitutes if a(n) __________ in the price of one of the goods causes consumers to demand more of the other good, holding all other factors constant.

increase

Two goods are substitutes if a(n) __________ in the price of one of the goods causes consumers to demand more of the other good, holding all other factors constant. Multiple choice question.

increase

if the firm expects the price of a good they produce to fall in the future, they will likely __________ the amount of the good on the market now.

increase

When the price of a good __________ the quantity of the good demanded decreases. Multiple choice question.

increases

When income increases, consumers will decrease their quantity demanded of a(n) good.

inferior

When the quantity demanded of a good decreases as a consumer's income increases, then the good is said to be a(n) good.

inferior

The ________________ states that when quantity demanded increases when price falls and quantity demanded decreases when price increases.

law of demand

The _____ price necessary to induce producers to offer a given quantity for sale is sometimes referred to as the supply price for that level of output.

minimum

If the number of firms in the industry or the productive capacity of the firms increases, _________ of the good or service will be supplied.

more

In the general supply function, the slope parameter on the price of related good will be __________ if the goods are substitutes in production.

negative

When income increases, consumers will increase the quantity they demand of a(n) __________ good.

normal

In the general supply function, the slope parameter on price will be __________.

pos

In the general supply function, the slope parameter on the number of producers in the industry will be _________

positibvde

In the general supply function, the slope parameter on the number of producers in the industry will be __________.

positive

When the price of one good and the quantity demanded of another good are (positively/negatively) related in the general demand function for a good, then the good is a substitute good.

positively

A change in quantity demanded can only happen when

price changes

A change in quantity demanded occurs when:

price changes.

The inverse demand function is the demand function when

price is expressed as a function of quantity

A supply function where _________ is expressed as a function of ________ is called an inverse supply function.

price; quantity

A decrease in supply is a change in a determinant of demand that __________ the quantity supplied at every price.

red

The parameter in a linear function measures the effect on the dependent variable of changing one of the independent variable

slope

Goods are ___________ if one good can be used in the place of the other.

substitutes

Goods for which an increase in the price of one good relative to the price of another good causes producers to increase production of the now higher priced good and decrease production of the other good are called

substitutes in production

Quantity is the amount of a good or service offered for sale during a given period of time.

supplied

A graph showing the relation between quantity supplied and price, holding all other variables influencing quantity supplied constant, is a

supply curve

True or false: Market equilibrium can be illustrated as the point at which the supply curve and the demand curve intersect.

t

The demand price is

the maximum price consumers will pay for a specific amount of a good or service

A change in quantity supplied is

a movement along the supply curve

An decrease in the number of consumers in the market will _________ the demand for the good.

decrease

A direct demand function can be shown by:

a schedule. a graph. a table an equation.

An increase in demand is illustrated by

a shift of the demand curve to the right

The supply function when price is expressed as a function of quantity is

`the inverse supply function

When the slope parameter on income is positive

an increase in income will shift demand to the right the good is a normal good income increased demand

The market clearing price is the price when _____ can purchase and sell the quantity they want, respectively.

both buyers and sellers

If two goods are complements in production and one good increases in price, the production of ___________ will increase.

both goods

A(n) ___________ in supply is a change in a determinant of demand that reduces the quantity supplied at every price.

decrease

If both supply and demand decrease, equilibrium price will _________ and equilibrium quantity will __________.

change in an indeterminate way; decrease

If both supply and demand increase, equilibrium price will _________ and equilibrium quantity will __________.

change in an indeterminate way; increase

The difference between the economic value of a good and the price of the good is

consumer surplus

A price ceiling usually results in

quantity demanded that is greater than quantity supplied.

A change in demand

is a rightward or leftward shift of the demand curve

A government imposed minimum price is

price floor

The difference between the market price and the price producers would accept is ______.

producer surplus

_________ exists when quantity demanded is greater than quantity supplied.

shortage

The net gain to society from any specific level of output is

social surplus

Social surplus is the ___________ consumer surplus and producer surplus.

sum of

Social surplus can be illustrated on a market graph as the difference between

the demand curve and the supply curve

Which of the following are examples of substitutes?

Toyotas and Chryslers Hamburgers and hot dogs Pepsi and Coke

A movement along the supply curve is

a change in the quantity supplied

When one of the determinants of demand changes, there is a

change in demand

A decrease in demand

decreases quantity at every price

Goods are substitutes if:

they can be used in place of each other

Which of the following are determinants of demand?

Consumers' tastes Number of consumers in the market Prices of related goods Expectations of future prices Consumers' income

A table showing a list of possible product prices and the corresponding quantities supplied is

SUPPLE SCHEDUOLE

__________ is the relation between the quantity supplied and the six factors that jointly affect quantity supplied

The general supply function

If the demand for one good decreases when the price of another good increases, the goods are

complements

If the demand for one good increases when the price of another good decreases, the goods are

complements

Goods for which an increase in the price of one good relative to the price of another good causes producers to increase production both goods,

complements in production

An increase in demand occurs when

consumers increase the quantity demanded of a good at every price level

The six principle variables that influence the quantity supplied of a good include:

the prices of goods related in production the level of available technology the expectations of producers of the future price of the good the prices of inputs used to produce the good the price of the good the number of firms in the industry

The six principle variables that influence the quantity demanded of a good or service are:

the prices of related goods and services. the price of the good or service. the number of consumers in the market. the expected future price of the product. the incomes of consumers. the tastes or preference patterns of consumers.

An improvement in technology generally results in one or more of the inputs used in making a good to be more productive.

true

If an increase in income causes consumers to demand more of a good, when all other variables remain constant, then the good is said to be a normal good.

true