Chapter 3 Principles of Macroeconimics

Suppose it is discovered that consumption of Greek yogurt leads to a longer life. This information would lead to a(n):

increase in demand.

(Figure: Demand for Shoes) A shift to the right of the demand curve could be caused by a(n):

increase in income if the good is normal.

The market-clearing price:

is the price at which quantity demanded equals quantity supplied.

Which of the following will cause a movement down along a demand curve?

a decrease in the product price

A demand schedule is:

a list of prices and the quantities demanded at those prices.

Prices:

allow sellers to determine what goods to sell, help buyers find possible substitute goods, and contain information useful for all people involved in a transaction.

When the supply curve shifts out (to the right) and the demand curve shifts in (to the left), the equilibrium quantity will:

be indeterminate.

The law of supply states that if prices:

fall, consumers will purchase fewer products in the market.

An increase in supply causes the equilibrium price to ______ and the equilibrium quantity to _______.

fall; rise

If both demand and supply decrease, but the decrease in demand is greater than the decrease in supply, then the equilibrium price _____ and equilibrium output _____.

falls; falls

Willingness-to-pay is the:

highest value that a consumer believes a good or service is worth.

Which is NOT a determinant of supply?

national income

A market exists when:

people exchange money for goods and services.

In economic markets, what "signals" information between buyers and sellers?

prices

The market economy is often called the price system because:

prices provide information for both buyers and sellers.

Which pair are MOST likely substitute goods?

soft drinks and lemonade

A good is a normal good if:

the demand curve shifts out if income goes up.

Demand refers to:

the goods and services buyers are willing and able to purchase at various prices in a given period of time.

Supply is defined as:

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.

A surplus exists:

when quantity supplied exceeds the quantity demanded.