Test 1 Ch. 3 Supply and Demand
If the price of jet fuel rises, the supply/demand of airplane trips increases/decreases
supply, decreases
Profit=
total revenue-total cost
Inferior Good
When income increases, demand decreases
Normal Good
When income increases, demand increases
How do we go back to equilibrium price?
automatic adjustment mechanism
If a rise in the price of gasoline decreases the demand for large cars, gasoline and large cars are...
complements
Pizza and hamburgers are substitutes. A rise in the price of pizza raises/lowers the price of a hamburger and increases/decreases the quantity of hamburgers
raises, increases
A change in non-price determinant of supply is a...
shift in supply curve and a change in supply
If supply increases, what is the effect?
shift rightward in supply curve
What is it called when Qd is greater than Qs?
shortage
Profit equation
PxQ-total cost
The law of demand concludes that a rise in the price of a golf decreases/increases the Qd and shifts/movement along the demand curve for golf balls
decreases, movement along the demand curve
Price of wheat rises and quantity of wheat increases. This is a result of...
demand curve shifting rightward
What is it called when Qs is greater than Qd?
excess supply or surplus
Qd=
f(price, price of complements, price of substitutes, income, preferences, expectations, number of consumers)
Qs=
f(price, resource prices, prices of related goods produced, technology, expectations, number of suppliers)
Technological improvement lowers cost of producing coffee. Price of a pound of coffee rises/falls and quantity of coffee increases/decreases
falls, increases
If there is a shortage of a good, the Qd is less/greater than the Qs and the price will fall/rise
greater, rise
An increase in the number of producers of gruel increases/decreases the supply of gruel and shifts the supply curve of gruel rightward/leftward
increases, rightward
An increase in the price of cheese used to produce pizza shifts the supply curve of pizza rightward/leftward and shifts the demand curve for pizza leftward/not at all
leftward, not at all
If there is a surplus of a good, the Qd is less/greater than the Qs and the price will fall/rise
less, fall
A change in price of demand is a...
movement along the demand curve and a change in quantity demanded
A change in price of supply is a...
movement along the supply curve and a change in quantity supplied
Number of firms producing computers decreases. Price of computers rises/falls and quantity of computers increases/decreases
rises, decreases
A change in non-price determinant of demand is a...
shift in demand curve and a change in demand
