Macro econ ch.3 and parts of ch.4

What is the difference between an 'increase in supply' and an 'increase in quantity supplied'?

An "increase in supply" means the supply curve has shifted to the right while an "increase in quantity supplied" refers to a movement along a given supply curve in response to an increase in price.

From the list below, select the variable that will cause the demand curve to shift:

Consumer income

Can economic analysis provide a final answer to the question of whether the government should intervene in markets by imposing price ceilings and price floors? Why or Why not?

Economic analysis cannot provide such an answer because it seeks to address positive questions such as "what is."

From the list below, select the variable that will cause the supply curve to shift:

The cost of raw materials

If automakers reduce the price of SUV's to attract more customers, how will that affect the demand curve for SUV's?

There will be a movement downward along the demand curve.

If, in response to an increase in the price of chocolate, the quantity demanded of chocolate decreases economists would describe this as

a decrease in quantity demanded.

A black market is

a market in which buyers and selling occur at prices that violate government price regulations.

The law of demand implies, holding everything else constant, that

as the price of bagels increases, the quantity of bagels demanded will decrease.

Market price is determined by

both supply and demand.

Black market may arise

in reaction to binding price ceilings.

The demand by all the consumers of a given good or service is the _____ for the good or service.

market demand

"Rent controls, government farm programs, and other price ceilings and price floors are bad." This is an example of a

normative statement. The statement is concerned with what should be.

Do producers tend to favor price floors or price ceilings? Why? Producers favor

price floors because, when binding, price floors increase price above the equilibrium and increase producer surplus.

When the government imposes price floors or price ceilings,

some people win, some people lose, and there is a loss of economic efficiency.

One would speak of a change in quantity of a good supplied, rather than a change in supply, if

the price of the good changes.

If in the market for peaches, the supply curve has shifted to the left,

the supply of peaches has decreased.

According to the law of demand,

there is an inverse relationship between price and quantity demanded.