Economics Chapter 3
A change in supply causes a ______ the supply curve. A change in quantity supplied causes a ______ the supply curve.
shift of, shift of
A minimum price above the equilibrium price generates excess _______ .
demand
If both demand and supply increase simultaneously, the equilibrium price will increase if the change in _______ is relatively large.
equilibrium quantity
An excess supply of a product will cause the price to ______. As a consequence of the price change, the quantity demanded will _____ and the quantity supplied will ________.
decrease, increase, decrease
A change in price causes movement along a demand curve and a change in ______
quantity demanded
Which variables are held fixed when drawing a market supply curve?
wages paid to workers, the price of the materials used in production, taxes paid by producers
excess demand (sometimes called a shortage)
a situation in which , at the prevailing price, the quantity demanded exceeds the quantity supplied
demand schedule
a table that shows the relationship between the price of a product and the quantity demanded, ceteris paribus
Consider the effects of online distribution of movies. A decrease in the price of online movies shifts the demand for DVD movies to the _______. A decrease in downloading time shifts the demand for DVD movies to the _______.
right, left
An increase in the price of wood shifts the supply curve for pencils ________; an improvement in pencil-production technology shifts the supply curve for pencils ____________.
to the left, to the right
complements
two goods for which a decrease in the price of one good increases the demand for the other good
substitutes
two goods for which an increase in the price of one good increases the demand for the other good
If supply decreases while demand decreases, the equilibrium price will ______
increase
Suppose the equilibrium price of housing recently increased, and the equilibrium quantity increased as well. These changes were caused by an ________ in ________.
increase in demand
An excess demand for a product will cause the price to _____. As a consequence of of the price change, the quantity demanded will _____ and the quantity supplied will _______.
increase, decrease, increase
According to the law of supply, an increase in price ______ the quantity supplied.
increases
The market demand curve for a product will shift to the right when the price of a substitute good ________, the price of a complementary good _______, consumer income ________, and the population __________.
increases, decreases, increases, increases
An increase in demand for a product ________ the equilibrium price and _______ the equilibrium quantity.
increases, increases
change in quantity supplied
A change in the quantity firms are willing and able to sell when price changes; represented graphically by movement along the supply curve
change in quantity demanded
a change in the quantity consumers are willing and able to buy when the price changes; represented graphically by movement along the curve.
market demand curve
a curve showing the relationship between price and quantity demanded by all consumers, ceteris paribus
individual supply curve
a curve showing the relationship between price and quantity supplied by a single firm, ceteris paribus
market supply curve
a curve showing the relationship between the market price and quantity supplied by all firms, ceteris paribus
The market demand curve is the ______ sum of the individual demand curves
horizontal
The market supply curve is the _______ sum of the individual supply curves.
horizontal
Excess demand occurs when the price is _______ than the equilibrium price; excess supply occurs when the price is _____ than the equilibrium price.
less and greater
According to the law of demand, an increase in price _______ the quantity demanded.
lowers
The minimum supply price is the ______ price at which a product is supplied.
lowest
What variables are held fixed in drawing a market demand curve?
the price of the product and the quantity of the product purchased
The market equilibrium is shown by the intersection of the _______ curve and the _______ curve.
supply and demand
quantity demanded
the amount of a product that consumers are willing and able to buy
quantity supplied
the amount of a product that firms are willing and able to sell
minimum supply price
the lowest price at which a product will be supplied
law of demand
there is a negative relationship between price and quantity demanded, ceteris paribus
law of supply
there is positive relationship between price and quantity supplied, ceteris paribus
individual demand curve
a curve that shows the relationship between the price of a good and quantity by an individual customer, ceteris paribus
inferior good
a good for which an increase in income decreases demand
normal good
a good for which an increase in income increases demand
perfectly competitive market
a market with many sellers and buyers of a homogeneous product and no barriers to entry
change in supply
a shift in the supply curve caused by a change in a variable other than the price of the product
Change in demand
a shift of the demand curve by a change in a variable other than the price of the product
market equilibrium
a situation in which the quantity demanded equals the quantity supplied at the prevailing market price
excess supply (sometimes called surplus)
a situation in which the quantity supplied exceeds the quantity demanded at the prevailing price
supply schedule
a table that shows the relationship between the price of a product and quantity supplied, ceteris paribus
If supply increases while demand decreases, the equilibrium price will _______
decrease
Suppose the equilibrium price of accordions recently increased while the equilibrium quantity decreased. These changes were caused by an _______ in _________.
decrease in supply
The decrease in the number of bee colonies ____ the supply of fruits and berries, ______ the cost of producing ice cream, and _______ the equilibrium price of ice cream.
decrease, increase, increase
An increase in the supply of a product _______ the equilibrium price and ________ the equilibrium quantity.
decreases, increases
If a decrease in the price of drugs is accompanied by a decrease in quantity, the decrease in price was caused by a change in _________.
demand
If supply increases while demand decreases, the equilibrium quantity will decrease if the change in _____ is relatively large.
demand
When _____ changes, the equilibrium price and the equilibrium quantity in the same direction. When ______ changes, the equilibrium price and the equilibrium quantity change in opposite direction.
demand, supply
Which variables change as we move along the demand curve for pencils?
quantity of pencils demanded, price of pencils
Which variables change as we move along the supply curve for pencils.
quantity of pencils supplied, price of pencils
A change in price causes movement along a supply curve and a change in ____
quantity supplied
A change in demand causes a ______ the demand curve. A change in quantity demanded causes a ______ the demand curve.
shift of, movement along