econ quiz #2

Inferior good

A good for which the demand increases as income falls and decreases as income rises.

Normal good

A good for which the demand increases as income rises and decreases as income falls.

market

A mechanism through which buyers (demanders) and sellers (suppliers) communicate in order to trade goods and services

Prices of substitutes in production

A substitute in production is a good that can be produced in place of another good

Law of Supply

The rule that, holding everything else constant, increases in price cause increases in the quantity supplied, and decreases in price cause decreases in the quantity supplied.

Law of demand

The rule that, holding everything else constant, when the price of a product falls, the quantity demanded of the product will increase, and when the price of a product rises, the quantity demanded of the product will decrease.

competitive market

There are many buyers and sellers, all the products are identical, and there are no barriers to new sellers entering the market

a decrease in the demand for cigarettes due to changes in consumer tastes accompanied by an increase in supply due to advance in tabbaco farming will result in

a decresse in equilibrium price and an indeterminate change in equilibrium quantity

consider the market for grundles. if the people are willing to buy grundles when the price of goobers goes up, then wich of the following could be inferred

grundless and goobers are subtitutes

which of the following situation best illustrates the law of demand?

in the past several months, as the price of compact disc player has decreased, the quantity of compact disc polayer bought has increased.

if there is an improvement in technology for making footballs, then in the market for football would expect to see which of the following

increase in supply, price decreases, quantity decreses

the relationship between quantity demanded and price is

inverse

if the price of peanuts increase, what will be the effect on the equillibrium price and quantity in the market for peanut butter

price increase and quantity decreases

if there is an increase in demand (right shift) for a good, what will most likely happen to the equilibrium price and quantity of the good exchanged?

price increase and quantity increase

a technological improvement in the production of good X causes the:

supply curve for X to shift to the right

Prices of inputs (cost)

the prices of resources used in the production process help determine the costs of production incurred by firms.

wich of the following would likely result in a decrese in the equilibrium price of oranges

the weather furing this orange-growing season is not as it was last year

Market Equilibrium

Putting Demand and Supply Together

Equilibrium quantity will decrease,

Equilibrium price will decreas

Complements

Goods and services that are used together. When 2 goods are complements, the more consumers buy of one, the more they will buy of the other

Substitutes

Goods and services that can be used for the same purpose. When 2 goods are substitutes, the more you buy of one, the less you will buy of the other

Technological change

Improvements in technology enables firms to produce units of output with fewer resources

Demographics

The characteristics of a population with respect to age, race, and gender.

in the market shown in the graph above, at a price of 2.50, there will be

a surplus and the equilibrium price will eventually fall

which of the following will decrease the demand of beef (leftward shift)?

an increase in the price of potatoes, if potatoes and beef are complementary goods.

a leftward shift in the supply curve for pianos could be caused by

an increase in the wages of workers (input) that make pianos

The demand curve

can be used to identify how much consumers would buy at any given price.

for a particular demand curve

change in price results only in a movement along the demand curve.

which of the followng woulf cause a movement along the demand curve

change in the price of a good

because of a sharp increase in gasoline, the demand for sport utility vehicles (SUVs, a gas-Guzzler, has_______, thereby______ the equilibrium price and ______ the equilibrium quantity of SUVs traded.

decrease, lowering, decreasing

assuming ramen noodles are an inferior good, a decrease in income will shift the

demand curve for ramen noodles to the right

the relationship between quantity supplied and price is

direct

if the demand for a product increased at the same time that technological improvement lowered production cost, what would happen to the equilibrium price and quantity?

price would be indeterminate and quantity would be increase

other things equal, if the price of a key resource (input) used to produce product x falls, the:

product supply curve of X will shift to the right

if the price of cars significantly increase, then the

quantity supplied of cars will increse

in general, supply curves slope upward because

rising prices provide producers with a greater profit incentice

the American Heart association has just issued a report warning consumers about the negative health effects of eating beef. which of the following changes in the beef market is most likely to occur as a result

the demandd curve will shift to the left, decrease the price of beef

The amount of a particular good that sellers (suppliers) plan to sell also depends on many factors, such as the following:

• Price of the good • Prices of resources • Technology • Prices of other goods • Number of Suppliers • Natural conditions for production: ex. Weather

The amount of a good that is demanded depends on many factors, such as the following:

• Price of the product • Prices of related products • Consumer income • Tastes • Number of buyers in a market