Supply and Demand
Suppose Martin just bought a guitar from Jackson off Craigslist for $110. Martin's reservation price was $140, and Jackson's reservation price was $100. The total surplus from this transaction was ______
$40
The smallest amount you would have to pay Bronx Pizza to get them sell an additional cheese pizza is $8.84. This, $8.84 is
Bronx Pizza's reservation price
If butter and popcorn are complements, then an increase in the price of butter will lead to ____ in the demand for popcorn
a decrease
If a late frost damages a part of this year's orange crop, this should lead to
a decrease in the number of oranges bought and sold in the market and an increase in the price of oranges
2 factors that would lead to a decrease in demand
a decrease in the population of potential buyers and a decrease in the price of a substitute
Factors that will lead to an increase in the demand for a good
a decrease in the price of a complement and an exception of higher prices in the future
Factors that will lead to an increase in the demand for cell phones
a decrease in the price of cell phone apps (a complement to cell phones) and an increase in income (assuming cell phones are a normal good)
Factors that will lead to an increase in supply
a decrease int he cost of inputs to the production process and a technological advance that lowers production costs
A change in quantity demanded is represented by
a movement along the demand curve
If your cousin gets a big raise at work, and as a result, goes out to eat more often, then this suggests that for your cousin restaurant meals are
a normal good
A change in supply is represented by
a shift of the entire supply curve
The market for a good consists of
all of the buyers and sellers of that good
A medical breakthrough that decreases the cost of treating cancer should lead to ___ in the supply of cancer treatments
an increase
If Netflix and Hulu Plus are substitutes, then an increase in the price of Netflix will lead to ____ in the demand for Hulu Plus
an increase
If more people decide to go to medical school because of the popular television show "Grey's Anatomy," then this should lead to ____ in the supply of doctors
an increase
If the price of sugar falls, this is like to lead to ____ in the supply of candy
an increase
If an increase in the price of one good, causes a decrease (leftward shift) in the demand for another good, then the two goods are
complements
If the price of blueberries increases, the this should lead the supply of blueberry muffins to
decrease
If the price of butter increases, the quantity of butter demanded will
decrease
A schedule or graph showing the quantity or a good that buyers wish to buy at each price is known as
demand curve
Most economic systems in existence today are best described as
free-market economies
The introduction of rent controls could lead to which of the following
lower rent for those who live in rent-controlled apartments and a decrease in the quantity of apartments available for rent
In a free-market economy
people decide for themselves which careers to purse and which products to produce or buy
A maximum allowed price specified by law is a
price ceiling
The smallest dollar amount for which a seller would be willing to sell an additional unit of a good is
seller's reservation price
A change in demand is represented by
shift in the entire demand curve
Seller's surplus is
the difference between the price the seller receives and the seller's reservation price
2 situations int he market equilibrium likely to be economically inefficient
the noise from a factory affects the quality of sleep of people living around it and the froth released from a factory affects the quality of water in a nearby lake
The supply curve is a schedule or graph that shows
the quantity of a good that sellers wish to sell at each price
A movement along the supply curve represents a change in
the quantity supplied
Failure to achieve economic efficiency means that
the total economic surplus is not maximized
