Econ 2301 Ch #4

Excess demand

"shortage"

Excess Supply

"surplus"

Which of the following characteristics relate to price ceiling?

A law that prevents a price from rising above a certain level.

One alternative reaction occurs when buyers and seller decide to break the government rules on prices or sales, which is referred to as _______________.

Black market

What term is used to describe the loss in social surplus that occurs when a market produces an inefficient quantity?

Deadweight loss

Which of the following characteristics relate to complements?

Goods that are often used together, so that a rise in the price of one good tends to decrease the quantity consumed of the other good, and vice versa.

Which of the following characteristics relate to inferior goods?

Goods where the quantity demanded falls as income rises.

normal goods

Goods where the quantity demanded rises as income rises

What name is given to goods where the quantity demanded rises as income rises?

Normal goods

What term is used to describe a law that prevents a price from falling below a certain level?

Price floor

What term is used to describe the total number of units of a good or service purchased at a certain price?

Quantity demanded

What term is used to describe the total number of units of a good or service sold at a certain price?

Quantity supplied

What term is used to describe goods that can replace each other to some extent, so that a rise in the price of one good leads to a lower quantity consumed of another good, and vice versa?

Substitutes

True

The US agricultural sector experienced a severe drought in 2012. A drought decreases the supply of agricultural products, which means that at any given price, a lower quantity will be supplied; conversely, exceptionally good weather would shift the supply curve to the right.

What is meant by producer surplus?

The benefit producers receive from selling a good or service, measured by the price the producer actually received minus the price the producer would have been willing to accept.

Which of the following characteristics relate to equilibrium?

The combination of price and quantity where there is no economic pressure from surpluses or shortages that would cause price or quantity to shift.

What is meant by law of supply?

The common relationship that a higher price is associated with a greater quantity supplied.

What is meant by law of demand?

The common relationship that a higher price leads to a lower quantity demanded of a certain good or service.

What is meant by surplus?

When at the existing price, quantity supplied exceeds the quantity demanded.

After widespread press reports about the dangers of contracting "mad cow disease" by consuming beef from Canada, the likely economic effect on the U.S. demand curve for beef from Canada is:

a shift of the demand curve for beef to the left.

Any given demand or supply curve is based on the ceteris paribus assumption that ___________________.

all else is held equal

The term "ceteris paribus" means that:

all variables except those specified are constant.

Compliment

describes goods that are often used together, so that a rise in the price of one good tends to decrease the quantity consumed of the other good, and vice versa.

ceteris paribus

describes other things being equal.

inferior goods

goods where the quantity demanded falls as income rises

Price Ceiling

is a law that prevents a price from rising above a certain level.

Demand Curve

is a line that shows the relationship between price and quantity demanded of a certain good or service on a graph, with quantity on the horizontal axis and the price on the vertical axis.

Supply curve

is a line that shows the relationship between price and quantity supplied on a graph, with quantity supplied on the horizontal axis and price on the vertical axis.

Supply

is a relationship between price and the quantity supplied of a certain good or service.

Producer surplus

is the benefit producers receive from selling a good or service, measured by the price the producer actually received minus the price the producer would have been willing to accept.

Equilibrium price

is the price where quantity demanded is equal to quantity supplied.

Price Floors

means a law that prevents a price from falling below a certain level.

Substitutes

means goods that can replace each other to some extent, so that a rise in the price of one good leads to a lower quantity consumed of another good, and vice versa.

Deadweight Loss

means the loss in social surplus that occurs when a market produces an inefficient quantity.

Equilibrium quantity

means the quantity at which quantity demanded and quantity supplied are equal at a certain price.

Quantity demanded

means the total number of units of a good or service purchased at a certain price.

equilibrium

no shortage or surpluses that cause price or quantity to shift

In the case of rent control, a landlord may keep the rent low but put off needed maintenance or installing new appliances. This is known as ____________________.

quality adjustment

Supply Schedule

refers to a table that shows a range of prices for a good or service and the quantity supplied at each price.

Shifts in Supply

refers to when a change in some economic factor related to supply causes a different quantity to be supplied at every price.

If new manufacturers enter the computer industry, then (ceteris paribus):

the supply curve shifts to the right.