LearnSmart 2

A binding price ceiling tends to create what type of condition in the market?

Shortage

If the price of a good or service is less than the equilibrium price, a... exists. As a result, the price tends to...

shortage; increase.

As the price of a good decreases...

quantity supplied decreases.

Which of the following describes supply and demand analysis? - A quantitative tool - Use to predict pricing trends - A forecasting tool - Mostly quantitative

- A qualitative tool - Use to predict pricing trends - A forecasting tool

The demand function indicates that the quantity of a good consumed depends on the...

- Effect of the demand shifters - Price of the good - Income of the buyers

Indicate which of the following events occur(s) in the market for dark chocolate when the government imposes a strict tariff on imported cocoa and researchers release a credible study identifying huge health benefits to moderate, dark-chocolate consumption. - Equilibrium price increases - Equilibrium quantity increases - The effect on equilibrium quantity is unclear - The effect on equilibrium price is unclear

- Equilibrium price increases - The effect on equilibrium quantity is unclear

Comparative static analysis assumes which of the following?

- Goods are allocated by price - No price floors - No price ceilings

The law of demand analyzes the relationship between price and quantity demanded holding which of the following variable constant? - Taxes and subsidies - Income - Prices of related goods - Price of inputs

- Income - Prices of related goods

The law of demand analyzes the relationship between price and quantity demanded holding which of the following variables constant?

- Prices of related goods - Income

The quantity produced in a market depends on the price of the good and...

- The price of technology and technology-related goods - The price of other supply shifters such as taxes - The price of inputs such as labor costs

A decrease in supply is shown by which of the following?

A leftward shift of the supply curve.

Suppose there is an increase in the price of pork. If chicken is a substitute for pork, what can producers and consumers of chicken expect to see in the market for chicken?

An increase in the... - Quantity of chicken purchased - Price of chicken

What type of analysis studies the movement from one equilibrium to another?

Comparative static analysis

What is the effect of a price floor on consumers?

Consumers pay more and purchase less.

Which of the following expressions best describes Full Economic Price?

Dollar price + nonpecuniary price

Which of the following occur(s) when the supply of a good or service decreases? Equilibrium - Price decreases - Quantity increases - Quantity decreases - Price increases

Equilibrium - Quantity decreases - Price increases

Which of the following occur(s) when the supply of a good or service increases? Equilibrium... - Price decreases - Price increases - Quantity decreases - Quantity increases

Equilibrium... - Price decreases - Quantity increases

What type of price control will the government impose if it considers the equilibrium price to be too high?

Price ceiling

In product markets, an effective price floor creates which of the following conditions?

Surplus

A price ceiling is considered effective if it is set... the equilibrium price.

below

The difference between what consumers are willing to pay for a good or service and the market price is known as...

consumer surplus.

If a product is not perishable and firms expect the market price of the product to increase in the future, then the current supply of the good...

decreases.

Increases in population or population density tend to... demand for goods and services, all things equal.

increase

When a shortage exists, there is a tendency for price to... in order to equate quantity demanded and quantity supplied.

increase

According to the law of demand, as market price decreases, quantity demanded...

increases.

When demand decreases...

less is demanded at all prices.

As input prices rise, producers are willing to produce... goods and services at all prices. As a result, supply...

less; decreases.

A price ceiling is defined as the... legal price that can be charged in the market.

maximum

A price floor is defined as the... legal price that a firm can charge in a market.

minimum

The difference between the market price and the amount at which producers are willing and able to sell a good is called... surplus.

producer

If the price of a good or service exceeds the equilibrium price, a... exists. As a result, price tends to...

surplus; fall.

When a supply function such as Qxs = 15Px - 1200 represented with price isolated on the left-hand side, it is called...

the inverse supply function.

A function that describes the relationship between output and various prices, prices of inputs, and values of other variables is called...

the supply function.