Chapter 3 Supply and Demand
When the demand for pickles decreases, the demand curve . A} shifts to the right B} shifts to the left C} does not shift (you move downward along the existing demand curve) D} does not shift (you move upward along the existing demand curve)
B
When the supply of chairs decreases, the equilibrium price of chairs will ________ and the equilibrium quantity of chairs sold will ______ . A} increase; increase B} increase; decrease C} decrease; increase D} decrease; decrease
B
Which of the events will not cause the demand for pasta, an inferior good, to decrease? A} An increase in the price of marinara sauce. B} An increase in the price of rice. C} An increase in consumers' income. D} The surgeon general's conclusion that eating pasta more than once a week dramatically increases the risk of diabetes.
B
The _____ _______ __ ______ measures buyers' sensitivity to changes in price.
Price Elasticity of Demand
The sensitivity of buyers to changes in the price of a product is called
Price Elasticity of Demand
The _____ ________ __ ______ measures sellers' sensitivity to changes in price.
Price Elasticy of Supply
Demand increases when consumers want more of a good or service at any given price. When this occurs, the demand curve shifts to the _____
Right
Supply increases when sellers offer more units for sale at any given price. When this occurs, the supply curve shifts to the _____
Right
If the price is lower than the equilibrium price, a ________ exists that will place upward pressure on prices.
Shortage
When the quantity of a good demanded exceeds the quantity supplied, a ________ exists.
Shortage
The ______ _____ indicates the quantity of a good or service that producers are willing to offer for sale at various prices.
Supply Curve
A ______ ________ can be caused by a decrease in the _____ __ ______, ____________ ____________, a ________ in the price of a substitute in production, or an ________ in the number of producers.
Supply Increase,Price of Inputs,Technological Improvments,Increase,Increase
If the price is higher than the equilibrium price, a _______ exists that will place downward pressure on prices.
Surplus
price elasticity of demand
% Change in Quality Demanded / % Change in Price
price elasticity of supply
% change in quality supplied / % change in price
When the demand for shoes increases, the price of shoes will _______ and the quantity of shoes sold will ____. A} increase; increase B} decrease; decrease C} increase; decrease D} decrease; increase
A
The law of demand indicates that price and quantity demanded are . A} positively rated B} inversely related C} unrelated
B
The seller's side of the market is represented by the . A} demand curve B} supply curve C} price elasticity of supply D} equilibrium price and quantity
B
Which of the events below will cause the supply of wheat to increase? A} An increase in the price of corn, which can be grown on the same land used for wheat. B} Invention of faster wheat harvesting equipment. C} News that eating wheat daily can cure cancer. D} An increase in the price of fertilizer, which is applied to wheat fields.
A,B
A surplus of a good is likely to put ________ pressure on the price of that good. A} upward B} downward C} neither upward or downward
B
Demand curves slope: A} upward. B} downward. C} they are vertical. D} they are horizontal.
B
Sears has a 10% off sale on lawnmowers, and managers notice an 8% increase in lawnmower sales. This suggests that the demand for Sears lawnmowers is . A} elastic B} inelastic C} unit elastic D} It is impossible to reach a conclusion about the elasticity of demand for Sears lawnmowers.
B
Supply and demand: A} describe everything that happens in markets. B} simplify the real world by assuming away complicating factors. C} both represent the interests and motivations of buyers in the marketplace.
B
The ___ __ ______ states that price and quantity demanded are inversely related: As the price of a good or service increases, the quantity demanded by buyers decreases.
Law of Demand
When fewer units are offered for sale than consumers want to buy, A} A surplus exists. B} The price of the product will fall. C} The market price is below the equilibrium price. D} The market is in equilibrium.
C
Coffee and doughnuts are probably considered
Complementary
The law of supply says that as the price of a good increases, . A} the amount purchased by consumers will decrease B} the quantity offered for sale by producers will decrease C} the equilibrium quantity will decrease D} the quantity offered for sale by producers will increase
D
When the supply of snake oil increases, the supply curve A} shifts leftward B} shifts upward C} does not shift D} None of the above are true.
D
The ___ __ ______ states that price and quantity demanded are positively related: As the price of a good or service increases, the quantity supplied by sellers increases.
Law of Supply
The demand curve also represents the ________ _______ consumers receive from a particular unit of a good or service.
Marginal Benefit
The supply curve also represents the ________ ____ of producing a particular unit of a good or service.
Marginal Cost
The ______ for a good or service can be represented by drawing the supply and demand curves on the same graph.
Market
The ______ ___________ occurs at the price where the quantity consumers demand equals the quantity sellers supply.
Market Equilibrium
In the supply and demand model, the buyers' side of the market is depicted by the
Demand Curve
The ______ _____ indicates the quantity of a good or service that consumers are willing to buy at various prices.
Demand Curve
A ______ ________ can be caused by a decrease in the price of a ___________ good, an increase in the price of a __________ good, an increase in ______ (if the good is a ______ good) or a ________ in income (if the good is ________), or a change in ______ and preferences.
Demand Increase,Complementary,Substitute,Income,Normal,Decrease,Inferior,Tastes
When a small change in price leads to a large change in quantity purchased, demand is price _______
Elastic
When a small change in price leads to a large change in quantity supplied, supply is price _____
Elastic
Therefore, market forces tend to push the price to its __________ _____
Equilibrium Value
The price elasticity of demand generally is ______ the larger the number of substitutes for a particular good
Higher
When the supply of chairs decreases, the equilibrium price of chairs will ________; the equilibrium quantity of chairs sold will ______.
Increase;Decrease
If a large increase in the price of pickles causes only a small reduction in the quantity of pickles consumers buy, then the demand for pickles is said to be
Inelastic
Flour is a(n) _____ into the production of cookies
Input