ECO1 CHAPTER 3
demand schedule
A table showing the quantities of a good a consumer is willing and able to buy at alternative prices in a given time period, ceteris paribus.
Which one of the following best clarifies the ceteris paribus assumption? All variables are held constant or do not change for a particular analysis. Those variables under immediate consideration for a particular analysis are all held constant. Those variables under immediate consideration for a particular analysis are given equal weight. All variables in a particular analysis are given equal weight or consideration when used in a particular analysis. All variables except those under immediate consideration are held constant for a particular analysis.
All variables except those under immediate consideration are held constant for a particular analysis.
price ceiling
An upper limit imposed on the price of a good.
factor market
Any place where factors of production (e.g., land, labor, capital) are bought and sold.
product market
Any place where finished goods and services (products) are bought and sold.
Which of the following illustrates a change in quantity demanded (Qd)? The price of bananas rises, so people buy more apples. Following hurricane Katrina, oil production in the United States declined by 30%. The price of apples rises and rises and people continue to buy more and more apples. As a result of increasing prices, Mr. Snow decides to buy fewer shovels during a snowy winter. As a result of a recession in the United States, people spend less money on entertainment.
As a result of increasing prices, Mr. Snow decides to buy fewer shovels during a snowy winter.
Which of the following are components of the circular flow model? Consumers Component market Product market Factor market Businesses
Consumers Businesses Factor market Product market
True or false: Changes in the determinants of demand will cause a movement along the demand curve.
False
True or false: If there is a shift of the demand curve or a shift of the supply curve, it will not disturb the equilibrium price and quantity.
False
True or false: The three main decisions that must be addressed by an economic system include what goods are to be produced, who will produce them, and where they will be produced.
False
Which basic economic question asks about the parties who will get the goods produced? Multiple choice question. Where? For whom? What? How?
For whom?
Which basic economic question asks about the way in which goods are produced? Multiple choice question. Why? What? For whom? How?
How?
_______ represents the combined demands of all market participants. Multiple choice question. Market supply Market demand
Market demand
_______ is the total quantities of a good that sellers are collectively willing and able to sell at alternative prices in a given time period, ceteris paribus. Multiple choice question. Market demand Individual supply Market supply Individual demand
Market supply
_______ is an upper limit imposed on the price of a good. Multiple choice question. Equilibrium price Price floor Price ceiling Market price
Price ceiling
Which of the following will cause a change in supply rather than a change in quantity supplied? Multiple select question. Taxes Expectations Product price Factor costs Technology
Taxes Expectations Factor costs Technology
supply
The ability and willingness to sell (produce) specific quantities of a good at alternative prices in a given time period, ceteris paribus.
market surplus
The amount by which the quantity supplied exceeds the quantity demanded at a given price; excess supply.
ceteris paribus
The assumption of nothing else changing.
Which of the following defines ceteris paribus? Multiple choice question. The idea that, in a particular analysis, "additional" factors, other than those under consideration, play a significant role in said analysis. The idea that factors other than those being considered in a particular analysis do not change. In a particular analysis, "additional" factors, other than those under consideration, are given equal consideration when factored into an analysis.
The idea that factors other than those being considered in a particular analysis do not change.
What determines market price and equilibrium output in a market? Multiple choice question. Quantity supplied Quantity demanded The interaction of buyers and sellers Input prices The number of sellers in a market
The interaction of buyers and sellers
equilibrium price
The price at which the quantity of a good demanded in a given time period equals the quantity supplied.
law of demand
The quantity of a good demanded in a given time period increases as its price falls, ceteris paribus.
demand
The willingness and ability to buy specific quantities of a good at alternative prices in a given time period, ceteris paribus.
True or false: A market surplus occurs when quantity supplied exceeds quantity demanded.
True
True or false: Equilibrium price is the price at which the quantity of a good demanded in a given time period equals the quantity supplied.
True
True or false: Specialization occurs in situations where we can, but choose not to, produce everything we need or desire. True False
True
True or false: To determine total demand, we add the separate demands of all individual consumers in the market.
True
The three main decisions that must be addressed by an economic system include ______. Multiple select question. WHAT goods and services to produce WHY output is produced HOW output is produced FOR WHOM output is produced
WHAT goods and services to produce HOW output is produced FOR WHOM output is produced
Which basic economic question asks about the mix of output that society produces? Multiple choice question. How? When? What? For whom?
What?
The willingness and ability of a consumer to buy a normal product falls because of ______. Multiple choice question. no change in income a raise in wages a rise in income a fall in income
a fall in income
The demand for a product is likely to increase due to: Multiple choice question. a decrease in price an increase in the number of buyers an increase in the quantity of competitive goods a decrease in supply
an increase in the number of buyers
Consider the relationship between the price of gas and the quantity of gas consumed by drivers. If we are to consider the price of gas as the only factor affecting the quantity of gas consumed, while holding other factors such as drivers' incomes and tastes and preferences irrelevant, then we are invoking ______. Multiple choice question. economic generalizations ceteris paribus marginal analysis the law of supply
ceteris paribus
The equilibrium price will _______ whenever the supply or demand curve shifts. Multiple choice question. increase decrease remain unchanged change
change
The majority of participants in markets are businesses. government agencies. consumers.
consumers.
Which of the following is an effect of price ceiling? Multiple select question. decrease the quantity supplied create a market shortage increase the quantity demanded decreasing the quantity demanded Create a market surplus
decrease the quantity supplied create a market shortage increase the quantity demanded
An unfavorable change in consumer tastes and preferences for a product will ______ demand, which is illustrated as a shift of the demand curve to the ______. Multiple choice question. decrease; left increase; left increase; right decrease; right
decrease; left
A table showing the quantities of a good a consumer is willing and able to buy at alternative prices in a given time period, ceteris paribus, is a [demand] schedule.
demand schedule
A table showing the quantities of a good a consumer is willing and able to buy at alternative prices in a given time period, ceteris paribus, is a ______. Multiple choice question. market supply schedule demand schedule demand curve
demand schedule
Factors of production, such as land and capital, are exchanged in ______ markets. Multiple choice question. product factor
factor
The economic question of '______ to produce' is about decisions related to who is going to consume the goods and services produced. Multiple choice question. how what why for whom
for whom
Knowing who the participants are in markets is _____ to understanding how they work. Multiple choice question. irrelevant helpful
helpful
At a market's equilibrium price, every consumer who wished to make a purchase was able to do so. Yet, some consumers left the market without making a purchase because they viewed the price as being too ______. Multiple choice question. low high controlled
high
The economic question of '______ to produce' is about decisions related to the mix of factor inputs (land, labor, capital...) used to produce goods and services. Multiple choice question. how what for whom why
how
The determinants of demand include (select all that apply) ______. Multiple select question. cost of production marginal utility income tastes expectations the availability and prices of other goods
income tastes expectations the availability and prices of other goods
When consumers purchase a good or service, they do so in order to ______ their level of utility or satisfaction. Multiple choice question. equalize trade decrease increase
increase
The supply curve is an upward-sloping curve because as price ______, the producer will be willing to supply ______ of the product. Multiple choice question. decreases; more increases; more decreases; the same amount increases; less
increases; more
According to the law of [demand], the quantity of a good demanded in a given time period increases as its price falls, ceteris paribus.
law of demand
At a market's equilibrium price, every seller who wished to make a sale was able to do so. Yet, some sellers left the market without making a sale because they viewed the price as being too: Multiple choice question. low. biased. high.
low.
For every good or service, the quantities demanded by individual consumers at every price are added together to compute ______ for a good or service. Multiple choice question. individual supply individual demand market demand market supply
market demand
The only factor that causes a movement along the supply curve is _____. Multiple choice question. technology subsidies price taxes
price
The supply curve illustrates the relationship between ______. Multiple choice question. cost and price price and quantity demanded price and quantity supplied product and quantity supplied
price and quantity supplied
In free markets, though prices will rise and fall, equilibrium ______ and ______ will always be achieved. Multiple choice question. demand, supply profits, sales price, quantity
price, quantity
Specialization is about an individual or firm using available resources to: produce one or only a few goods and services produce a wide variety of goods and services producing only services
produce one or only a few goods and services
A ______ market is any place where finished goods and services are bought and sold. Multiple choice question. product factor
product
A change in ______ refers to a movement along the demand curve in response to changes in the price of a good or service, whereas a change in ______ refers to a shift of the demand curve leftward or rightward in response to anything other than changes in the price of a good or service. demand, quantity demanded supply, quantity supplied quantity demanded, demand quantity supplied, supply
quantity demanded, demand
The two dimensions associated with every arrow depicted in the circular flow diagram involve a _____ flow and a _____ flow. Multiple choice question. voluntary, involuntary real, fictional real, monetary natural, unnatural
real, monetary
A market surplus is also known as excess ______. Multiple choice question. demand imports capital supply
supply
The ability and willingness to sell specific quantities of a good at alternative prices in a given time period, ceteris paribus, is the definition of ______ Multiple choice question. market supply circular flow demand
supply
The determinants of demand include (select all that apply) ______. Multiple select question. tastes income number of sellers expectations cost of production
tastes income expectations
The participants involved in the circular flow model are: Multiple choice question. only the government and consumers only the local and state government and international participants the government, consumers, businesses, and international participants the federal, state, and local governments
the government, consumers, businesses, and international participants
A consumer's willingness to purchase in a market must be supported by the ability to make the purchase as evidenced by ______. Multiple choice question. high credit scores the necessary motivation supply and demand the necessary income
the necessary income
The market supply curve for a good is ______. Multiple choice question. the summation of all the individual supply curves for the good the product of all the individual supply curves for the good determined by the individual demand curves of the good determined by the market demand curve of the good
the summation of all the individual supply curves for the good
Equilibrium price and equilibrium quantity occur where ______. Multiple choice question. the supply curve intersects the demand curve the supply curve intersects the price the demand curve intersects the marginal benefit curve price intersects the demand curve
the supply curve intersects the demand curve
Every arrow depicted in the circular flow diagram actually has _____ dimensions. Multiple choice question. three two an unknown number of
two
The goal of consumers is to maximize: profit growth welfare utility
utility
The economic question of '______ to produce' is about decisions related to the mix (quantity and type) of goods and services to make available in a given economy. Multiple choice question. what why for whom how
what
Demand only exists if someone is: Multiple choice question. interested in the good or service only if it is free. willing and able to pay for the good. willing and able to sell the good.
willing and able to pay for the good.
Demand only exists if someone is: Multiple choice question. willing and able to sell the good. interested in the good or service only if it is free. willing and able to pay for the good.
willing and able to pay for the good.
