Economics, Capters 4-5
Law of supply
The higher (lower) the price of the good, the greater (smaller) the quantity supplied.
A supply curve illustrates a ________ relationship between _______ and _______
direct; price; quantity supplied
The law of demand states that when the price of a good _______ (_______), the quantity demanded ________ (_____), ceteris paribus.
falls (rises); rises (falls)
The _______ (_____) the price of the good, the ________ (_______) the quantity supplied, ceteris paribus.
higher (lower); greater (smaller)
The relationship between price and quantity demanded is __________ or ____________.
inverse; negative
The ________ demand curve shows the amount of a good that all buyers in the market would be willing and able to buy at various prices.
market
The ________ supply curve is a graphical representation of the amount of goods and services that suppliers are willing and able to buy at various prices.
market
Along a supply curve,
quantity supplied changes as price changes.
An increase in demand is represented by a _________ shift in the demand curve; a decrease in demand is represented by a ________ shift in the demand curve.
rightward; leftward
Change in demand __________; change in quantity demanded ___________
shifts the line right or left; moves the point on the line up or down.
The increase of consumer income will not effect the
supply.
What would not cause a change in the demand for cheese?
An increase in the price for cheese.
Substitutes, a higher price for one will result in
an increase in demand for the other.
Whenever the price of Good A decreases, the demand for Good B increases. Goods A and B appear
complements
If incomes are rising, in the market for an inferior good,
demand will fall.
Shift supply curve to the right
improvement in technology.
An ________ demand curve is a graphical representation of the relationship between the price and the quantity demanded.
individual
Pepperonis had an increase in price, which variable determining the position of the supply curve has changed, and what effect does it have on supply?
input prices; supply decreases
The relationship between price and quantity supplied is ________ because profit opportunities are greater at ________ prices and because the _________ production costs of increased output mean that suppliers will require _______ prices.
positive; higher; higher; higher
According to the law of demand, other things being equal, when the price of a good or service falls, the _______________ increases.
quantity demanded
The difference between a change in quantity demanded and a change in demand is that a change in
quantity demanded is caused by a change in a good's own price, while a change in demand is caused by a change in some other variable, such as income, tastes, or expectations.
The difference between a change in quantity supplied and a change in supply is that a change in
quantity supplied is caused by a change in a good's own price, while a change in supply is caused by a change in some other variable, such as input prices, prices of related goods, expectations, or taxes.
An upward-sloping of the supply curve shows that
sellers are willing to increase production of their goods if they get higher prices for them.
A leftward shift in supply could be caused by
some firms leaving the industry.
Whenever the price for good A increases, the demand for Good B increases as well. Goods A and B appear to be
substitutes
A market will experience a _______ in a situation where quantity supplied exceeds quantity demanded and a _________ in a situation where quantity demanded exceeds quantity supplied.
surplus; shortage
The market supply curve of a particular product indicates the total quantities
that sellers are willing and able to offer at different prices.
If the rise of chocolate is expected to rise soon
the current market demand for chocolate will increase.
A shortage occurs whenever
the price is less than equilibrium price.
Law of demand
the quantity of a good or service demanded varies inversely(negatively) with its price, ceteris paribus.
A change in ____________ leads to a change in quantity demanded, illustrated by a __________ demand curve.
a good's price; movement along
Surplus
a situation when the quantity supplied exceeds the quantity demanded.
Shortage
a situation where quantity demanded exceeds quantity supplied.
The price of a good will tend to rise when
a temporary shortage at the current price occurs (assuming no price controls are imposed).
What are determinants of supply
-input prices -technology -expectations -the price of related goods
What would increase the demand for jelly?
An increase in income; jelly is a normal good.
