Chapter 3 Principles of Macroeconimics
Suppose it is discovered that consumption of Greek yogurt leads to a longer life. This information would lead to a(n):
increase in demand.
(Figure: Demand for Shoes) A shift to the right of the demand curve could be caused by a(n):
increase in income if the good is normal.
The market-clearing price:
is the price at which quantity demanded equals quantity supplied.
Which of the following will cause a movement down along a demand curve?
a decrease in the product price
A demand schedule is:
a list of prices and the quantities demanded at those prices.
Prices:
allow sellers to determine what goods to sell, help buyers find possible substitute goods, and contain information useful for all people involved in a transaction.
When the supply curve shifts out (to the right) and the demand curve shifts in (to the left), the equilibrium quantity will:
be indeterminate.
The law of supply states that if prices:
fall, consumers will purchase fewer products in the market.
An increase in supply causes the equilibrium price to ______ and the equilibrium quantity to _______.
fall; rise
If both demand and supply decrease, but the decrease in demand is greater than the decrease in supply, then the equilibrium price _____ and equilibrium output _____.
falls; falls
Willingness-to-pay is the:
highest value that a consumer believes a good or service is worth.
Which is NOT a determinant of supply?
national income
A market exists when:
people exchange money for goods and services.
In economic markets, what "signals" information between buyers and sellers?
prices
The market economy is often called the price system because:
prices provide information for both buyers and sellers.
Which pair are MOST likely substitute goods?
soft drinks and lemonade
A good is a normal good if:
the demand curve shifts out if income goes up.
Demand refers to:
the goods and services buyers are willing and able to purchase at various prices in a given period of time.
Supply is defined as:
the maximum amount of a product that sellers are willing and able to provide for sale over some time period at various prices, holding all other relevant factors constant.
A surplus exists:
when quantity supplied exceeds the quantity demanded.