Macro Econ- Chapter 3

In econ, the demand for a good refers to the amount of the good that people:

will buy at various prices

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 left

(figure 3-1) Using the graph, beginning on D1, a shift to D2 would indicate a:

increase in demand

The demand schedule for a good:

indicated the quantities that will be purchased at alternative market prices.

Economists refer to the relationship that a higher price leads to a lower quantity demanded as the ___.

law of equilibrium

If a firm faces ___, while the prices for the output the firm produces remain unchanged, a firm's profit will increase.

lower cost of production

When economists talk about supply, they are referring to a relationship between price received for each unit sold and the ___.

quantity supplied

The downward slope of the demand curve again illustrates the pattern that as ___ rises, ___ decreases.

Price, quantity demanded

But nearly all supply curves share a basic similarity: they slope ___.

Up from left to right

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

The nature of demand indicates that as the price of a good increases:

buyers desire to purchase less of it

(figure 3-2) A change from point A to point B represents a:

decrease in quantity demanded

The ___ is the only price where quantity demanded is equal to quantity supplied.

equilibrium price

The demand curve for a typical good has a

negative slope b/c some consumers switch to other goods as the price rises

A supply curve is a graphical illustration of the relationship between price, shown on the vertical axis, and ___, shown on the horizontal axis.

quantity

A demand curve shows the relationship between price and ___ on a graph

quantity demanded

___ refers to the total number of units that are purchased at that price.

quantity demanded

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

the supply curve shifts to the right

When quantity demanded decreases in response to a change in price:

there is movement along the curve