symmes economics Ch. 7

floor

A price _________ is sometimes called a price support.

equilibrium price

Price at which the amount producers are willing to supply is equal to the amount consumers are willing to buy

elastic

When a change in price leads to a large change in quantity demanded, the demand is called __________.

shifts to the right

When a product becomes wildly popular (a new fad), the demand curve ____________.

substitutes

When the price of a good becomes too high, consumers look for __________.

substitutes

When the price of a good is too high for consumers, they look for ________.

Market

process of freely exchanging goods and services between buyers and sellers

surplus

Situation in which quantity supplied is greater than quantity demanded

shortage

Situation in which the quantity demanded is reater than the quantity supplied

fall

A decrease in income generally causes demand to fall, which in turn causes the quantity supplied and the equilibrium price to _______ (rise/fall).

left

A decrease in income, a decrease in population, a decrease in the price of a substitute, or an increase in the price of a complement causes the demand curve to shift to the ________ (right/left).

complement

A decrease in the price of a product (french fries) leads to an increase in the demand for its __________ good (ketchup).

falls

According to the law of demand, when the price of an item goes up, the quantity demanded ___________ (rises/falls).

more

According to the law of supply, higher prices prompt producers to produce __________ (more/less).

utility

Amount of satisfaction received from a purchae

marginal utility

An additional amount of satisfaction

right

An increase in income, an increase in population, an increase in the price of a substitute or a decrease in the price of a complement causes the demand curve to shift to the ______ (right/left).

elastic

Demand for one particular brand of coffee is probably __________(elastic/inelastic).

elasticity

Economic concept dealing with consumers' responsiveness to an incrase or decrease in price

law of diminishing returns

Economic rule stating that as more units of a factor of production are added, total output continues to incrase, but at a diminishing rate

substitution effect

Economic rule stating that if two items satisfy the same need and the price of one rises, people will buy the other

real income effect

Economic rule stating that individuals cannot keep buying the same quanitty of a product if its price rises while their incomes stay the same

law of demand

Economic rule stating that the quantity demanded and price move in opposite directions

more

Generally, the more substitutes there are for a good, the _______ (more/less) elastic the demand.

elastic

If a product has _______ (elastic/inelastic) demand, producers must be cautious about raising prices.

falls

If more suppliers enter the market, equilibrium price _______ (rises/falls).

falls

If price decreases, quantity supplied ______ (rises/falls).

rises

If price increases, quantity supplied _________ (rises/falls).

surplus

If the price of a product is above its equilibrium price, the result is a ________.

falls

If the price of an item rises, quantity demanded usually ___________ (rises/falls).

substitute

If the price of potatoes rises considerably, McDonald's may look for a _________ for french fries.

price ceiling

Legal maximum price that may be charged for a particular good or service

Demand

The amount of a good or service that consumers are able and willing to buy at various possible prices during a specific time period

supply

The amount of a good or service that producers are able and willing to sell at various prices during a specified time period is _________.

shifts to the right

The demand curve _________ in response to an increase in demand.

downward

The demand curve slopes ________ from left to right.

`rationing

The distribution of goods and services based on something other than price

equilibrium

The interaction of supply and demand determines the __________ price.

diminishing marginal utility

The principle that states that the more you have of something, the less satisfaction you will get from an additional unit is the law of ___________.

price

The quantity demanded of a product is affected by __________.

upward

The supply curve slopes _______ from left to right.

right

When the quantity demanded increases at all price points, the demand curve shifts to the _________ (right/left).