Unit 1 Chapter 3

A change in price of a good or service typically causes ___________________________ for that specific good or service.

A change along the demand curce

Andy

Andys demand for beer

Interpret the following statement: "An increase in the price of wheat will encourage farmers to increase the quantity of wheat supplied to the market."

The statement is correct

If the price is below the equilibrium level, then the quantity demanded will exceed the quantity supplied. This is known as ___________________

A shortage

Any given demand or supply curve is based on the ceteris paribus assumption that ___

All else is held equal

The nature of deman indiciated that as the price of a good increases

Buyers desire to purchase less of it.

When __________________, a firm will supply a higher quantity at any given price for its output, and the supply curve will shift to the right

Costs of production fall

The ____ is the only price where quantity is equal to quantity suppllies

Equilibrium price

Which of the following would reduce the supply of microcomputers?

Higher wage rated for the workers that assemble the computers.

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

Law of demand

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:

NOT: A movement down along the demand curve for beef to the right.

A drought decreases the supply of agricultural products, which means that at any given price a lower quantity will be supplied; conversely, especially good weather would shift the __________________

NOT: Demand curve to the left

If an increase in the price of Good X causes a decrease in the demand for Good Y, we can conclude that:

NOT: Goods X and Y are substitute goods

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

Price, quantity demanded

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

Quantity demanded

_____ refers to the total number of units that are produced at that price.

Quantity demanded

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

Quantity supplies

A severe freeze

The supply curve

Nearly all supply curves share a basic similarity: they slope _______________

Up from left to right

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

Will buy at various prices