Marco Econ Test #2
Many New York City street vendors switch to selling pizza out of their "street cart". Hence, the supply of pizza is likely to _____________.
Increase
Shortage
The condition present whenever price falls below the equilibrium price (PEQ)
Surplus
The condition present whenever price rises above the equilibrium price (PEQ)
Oty. Demanded
The specific amount consumers are willing to purchase at a specific price
Qty. Supplied
The specific amount firms/sellers are willing to sell at a specific price
The Law of Demand
An inverse relationship exists between PRICE and QTY. DEMANDED.
Market
Any arrangement in which buyers and sellers interact to determine the price and quantity of goods exchanged
Inferior Good
Any good for which there is a direct relationship between INCOME and the DEMAND for the good
Normal Good
Any good for which there is a direct relationship between INCOME and the DEMAND for the good
Complements
Goods that are typically consumed together, inverse relationship between the price of one good and the demand for some other good.
Substitutes
Goods that typically compete for consumer purchases, direct relationship between the price of one good and the demand for some other good.
Increase in Quantity Demanded (Qd)
A rightward movement on the demand curve
The Law of Supply
A direct relationship exists between PRICE and QTY. SUPPLIED.
Decrease in Quantity Demanded
A leftward movement on the demand curve
Market Equilibrium Price
Equilibrium occurs where the Demand Curve intersects the Supply Curve
Quantity supplied is the specific amount that consumer are willing to purchase at a specific price
False
Substitute goods are goods that are consumed together
False
The law of supply states that a positive relationship exists between the price of a good and the quantity of that good demanded
False
A change in the quantity demanded is depicted graphically as a movement along the supply curve
False
A decrease in supply is depicted graphically as a rightward shift of the supply curve
False
A new advertising campaign positively affects popularity. This should cause a decrease in demand
False
A shortage exists when the quantity demanded is less than the quantity supplied
False
Decreased in Quantity Supplied (Qs)
Leftward movement on the supply curve
Decrease in Demand
Leftward shift of the entire demand curve
Decrease in Supply
Leftward shift of the entire supply curve
A rule that prohibits price from rising above a specific value
Price Ceiling
A rule that prohibits price from falling below a specific value
Price Floor
Demand
Represents the choice making behavior of buyers
Supply
Represents the choice making behavior of sellers
Increased in Quantity Supplied (Qs)
Rightward movement on supply curve
Increase in Demand
Rightward shift of the entire demand curve
Increase in Supply
Rightward shift of the entire supply curve
If price falls below the equilibrium price then a ______________ will be present in the market.
Shortage
A normal good is a good in which a positive relationship exists between the income of consumers and the demand for the good
True
A shortage exists when the quantity supplied is less than the quantity demanded
True
The Law of Demand states that a negative relationship exists between the price of a good and the quantity of the good demanded
True
