Chapter 3

excess demand

at the existing price, the quantity demanded exceeds the quantity supplied; also called a shortage

demand schedule

a table that shows a range of prices for certain good or service and the quantity demanded at each price

excess supply/ surplus

at the existing price, quantity supplied exceeds the quanitty demanded

When quantity supplied exceeds the quantity demanded

A surplus exists

The maximum price a buyer is willing to pay in the market price

Consumer surplus is equal to the difference between what

Under the demand curve and above the market price

Consumer surplus is shown graphically as theArea

Shift of the demand curve

Decide whether the following scenario will cause a shift in the demand curve or movement along a demand curve Out in in a burger joint with an absurd National following in the u.s. sells more Burgers as the price of chicken increases

Shift of the demand curve

Decide whether the following would cause a shift in the demand curve or movement along a demand curve After it earns first prize in the spicy category of a Ramen tasting competition college students buy more remain brand ramen noodles

Movement along the demand curve

Determine whether the following would cause a shift in the demand curve or movement along a demand curve Labor Bureau at Chase offers a one weekend clearance sale on his old model of desks which causes students to rush to upgrade their dorm furniture

Movement along the demand curve

Determine whether the following would cause a shift in the demand curve or movement along a demand curve Natori raises the price for its laundry detergent which results in Less sales and strange sense around the college dorm floors

Quantity demanded increases

For this example determine how the market for the good in bolded text or respond to the describe change whether it be quantity demanded increases quantity demanded remains unchanged or quantity demanded decreases Buy one get one free special for mp3 albums on Amazon

Quantity demand decreases

For this example determine how the market for the good in bolded text or respond to the describe change whether it be quantity demanded increases quantity demanded remains unchanged or quantity demanded decreases Due to increases in Hay prices and input for raising cattle the price of a gallon of 2% milk increases from 2.98 dollars to 3.25 dollars

Quantity demanded increases

For this example determine how the market for the good in bolded text or respond to the describe change whether it be quantity demanded increases quantity demanded remains unchanged or quantity demanded decreases Groupon has a coupon for $6 off the price of laser tag

Quantity demanded decreases

For this example determine how the market for the good in bolded text or respond to the describe change whether it be quantity demanded increases quantity demanded remains unchanged or quantity demanded decreases Sharp increase in the price of wood causes increases and prices for dressers and desks

Quantity demanded increases

For this example determine how the market for the good in bolded text or respond to the describe change whether it be quantity demanded increases quantity demanded remains unchanged or quantity demanded decreases Week-long special at the grocery store where pork shoulder is on sale for a dollar 99 a pound down from 399 a pound

Inverse or negative

In a market economy there is a what relationship between the price of a good and the amount of that good buyers want to buy

The market price and the minimum price a seller is willing to accept

Producer Surplus is a difference between

Above the supply curve and below the market price

Producer Surplus is shown graphically in the area

Movement along the supply curve

Sort the following scenarios into whether the change in quantity described is caused by a shift in the supply curve or movement along a supply curve A local Fight Club supplies less of its premium quality soap as a result of lower prices

Shift of the supply curve

Sort the following scenarios into whether the change in quantity described is caused by a shift in the supply curve or movement along a supply curve After discovering that flash steaming tuna first before using a mechanical processes to extract me remove Fortuna more cans of tuna hit the shows that all major Grocers

Movement along the supply curve

Sort the following scenarios into whether the change in quantity described is caused by a shift in the supply curve or movement along a supply curve Americans put up their gold and silver jewelry for sale as a result of rising prices

Shift of the supply curve

Sort the following scenarios into whether the change in quantity described is caused by a shift in the supply curve or movement along a supply curve Amplitude decides to join the smartphone market

As the price of good increases buyers want to purchase less

The basic proposition of the law of demand is that

The quantity of a good or service that people want to purchase at different possible prices

The concept of demand is best described as what

The positive relationship between price and quantity supplied

The law of supply explains

Supply

The maximum amount of a product that sellers are willing and able to provide for sale over a relevant range of prices holding all other factors constant is called

Equilibrium price

The price that results when quantity demanded equals quantity supplied is most correctly called the

quantity demanded

The total number of units purchased at that price is called the

quantity supplied

The total number of units that the seller is willing and able to sell at that price is called the

shortage

at the existing price, the quantity demanded exceeds the quanitty supplied

price

What a buyer pays for a unit of the specific good or service is called

The law of supply

When the market price of a good increases the amount that sellers are willing to offer for sale increases this statement is best described as

Ceteris paribus

Which phrase do we use to indicate that we are trying to study the relationship between two variables while the values of all other variables are held unchanged

If every variable is allowed to change it would be impossible to isolate the impact of one variable on another

Why is the Restriction so useful in economic analysis

substitute

a good hat can replace another to some extent, so that greater consumption of one good can mean less of the other

normal good

a good in which the quantity demanded rises as the income rises and in which quantity demanded falls as income falls

inferior good

a good win which the quantity demanded falls as income rises, and in which quantity demanded rises and income falls

demand curve

a graphic representation of the relationship between price and quantity demanded of a certain good or service, with quantity on horizontal axis and the price on the vertical axis

price ceiling

a legal maximum price

price floor

a legal minimum price

supply curve

a line that shows the relationship between price and quantity supplied on a graph, with quantity supplied on the horizontal axis and price on the vertical axis

supply schedule

a table that shows a range of prices for a good or service and the quantity supplied at each price

complements

goods that are often used together so that consumpstion of one good tends to enhance consumption of the other

price control

government laws to regulate prices instead of letting market forces determine prices

Price

is what the producer receives for selling one unit of a good or service.

ceteris paribus

other things being equal

Demand

the amount of some good or service consumers are willing and able to purchase at each price, during a specific time period.

factors of production

the combination of labor, materials and machinery that is used to produce goods and services; also called inputs

inputs

the combination of labor, materials, and machinery that is used to produce goods and services; also called factors of production

law of supply

the common relationship that a higher price leads to a greater quantity supplied and a lower price leads to a lower quantity supplied while all other variables are held constant.

Law of Demand

the common relationship that a higher price leads to a lower quantity demanded of certain good or service and lower price leads to a higher quantity demand while all other variables are held constant

consumer surplus

the extra benefit comsumers receive from buying a good or service measured by what the individuals would have been willing to pay minus the amount that they actually paid

producer surplus

the extra benefit producers receive from selling a good or service, measured by the price the producer actually received minus the price the producer would have been willing to accept

deadweight loss

the loss in social surplus that occurs when a market produces an inefficient quanitty

equilibrium price

the price where quantity demanded is equal to quantity supplied

equilibrium quantity

the quantity at which quantity demanded and quantity supplied are equal for a certain price level

supply

the relationship between price and the quantity supplied of a certain good or service

equilibrium

the situation where quantity demanded is equal to the quantity supplied; the combination of price and quantity where there is no economic pressure from surpluses or shortage that would cause price or quantity to change.

social surplus

the sum of consumer surplus and producer surplus

shift in demand

when a change in some economic factor (other than price) causes a different quantity to be demanded at every price

shift in supply

when a change in some economic factor (other than price) causes a different quantity to be supplied at every price