Macro- Chapter 4

Auction houses, coffee shops, and the New York Stock Exchange are different, and yet they are all considered markets because:

they bring buyers and sellers together

Which of these BEST describes a planned economy?

A country's prime minister decides that she knows what is best for her country, and dictates all factors of production for her nation.

Which of these is NOT a question you should ask yourself when predicting real-world market outcomes?

Are all demanders in the market as happy as they possibly could be with the change?

Recall that the demand curve presents your marginal benefit curve. With this in mind, and with no change in the availability of water, why is it that your willingness to pay for water is relatively small compared to other, nonessential to life, goods?

Because your water consumption is based on marginal benefit, not total benefit

Which of these LEAST describes an example of bundling?

Going out to dinner and ordering an appetizer

A taxi company finds success in its city of operation. Due to this success, a new company comes into town to try and compete with the original company. What has the inclusion of this new company created, and what shift will it cause in the market?

Increased number of sellers; increase in supply

Which of the following is correct about the market for red delicious apples?

It is perfectly competitive, because many consumers want an identical good.

When is it helpful to use the morning-evening method?

When analyzing a graph with both a supply and demand shift

All of these are examples of shortages EXCEPT:

a baker has to reduce the price on her bread because they're going bad before being sold.

Lin used to collect baseball cards when she was little. Now that she's grown up, she decides she doesn't really need them and wants to sell them. She decides to list them online and sell them to whoever bids highest. In what kind of market is Lin participating?

an auction

Any change that leads consumers to buy a larger quantity at each price is considered:

an increase in demand

The market demand curve summarizes people's:

current buying plans

Aika owns a flower shop. She finds that on Valentine 's Day, she sells out of every kind of flower and has no customers left waiting at the end of the day. This is an example of a market in:

equilibrium

What factor can be a shifter of BOTH supply and demand?

expectations

Prices provide _____ to companies.

incentives

In the market for shoes, there is a leftward shift in demand and a leftward shift in supply. How will this affect price and quantity respectively?

it depends; decreases

Mrs. Johnson decides that she is going to create her own country. She determines that she will be in charge of all production matters because she knows how to do things more efficiently than anybody else. What kind of economy has Mrs. Johnson effectively created?

planned

All of these factors shift the demand curve EXCEPT:

productivity

Priya is a student at Florida State University. She graduates soon and has started applying for jobs at various companies. What role is Priya playing in the labor market?

supplier

In economics, we often refer to buyers and sellers as:

suppliers and demanders

The quantity supplied and demanded in equilibrium is:

the equilibrium quantity.

At the equilibrium point:

there is no tendency for change

Movement along the demand curve due to a change in price is referred to as a change in _____.

quantity demanded

A market in disequilibrium is identified by all of these symptoms EXCEPT:

quantity demanded equaling quantity supplied.

Suppose the equilibrium price for a glass of lemonade is $3.At a price of $2, the market would experience a:

shortage

What quick diagnostic tool can you use to assess whether or not a market is in equilibrium?

whether or not prices are changing

Suppose you are a manager at a local coffee shop. You notice that every day by 8AM you are entirely sold out of bagels, but have at least 20 people ask for bagels later in the day. Which of the following decisions would result in the best outcome for your shop?

raise the price of bagels

What determines the total effect when there is a shift in both the supply and demand curves?

which shift is bigger