chapter 3

17. Refer to Figure 3-1. Using the graph above and beginning on D1, a shift to D2 would indicate a(n):

C. increase in demand.

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

C. law of demand

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

C. price, quantity demanded

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

C. quantity supplied

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

A. equilibrium price

10. The demand curve for a typical good has a(n):

A. negative slope because some consumers switch to other goods as the price rises.

7. A demand curve shows the relationship between price and _________________ on a graph.

A. quantity demanded

19. If new manufacturers enter the computer industry, then (ceteris paribus):

B. the supply curve shifts to the right.

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

B. up from left to right

9. In economics, the demand for a good refers to the amount of the good that people:

B. will buy at various prices.

16. 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:

B. a shift of the demand curve for beef to the left.

3. Any given demand or supply curve is based on the ceteris paribus assumption that ___________________.

B. all else is held equal

4. The term "ceteris paribus" means that:

B. all variables except those specified are constant.

20. If a firm faces ________________________, while the prices for the output the firm produces remain unchanged, a firm's profits will increase.

B. lower costs of production

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

B. quantity

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

B. quantity demanded

18. Refer to Figure 3-2. A change from Point A to Point B represents a(n):

C. decrease in quantity demanded.

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

D. buyers desire to purchase less of it.

13. The demand schedule for a good:

D. indicates the quantities that will be purchased at alternative market prices.

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

D. there is a movement up along the demand curve.