micro chapter 3
Select all that apply If the government of a country subsidizes the production of a good, it:
-lowers the cost of production. -increases supply.
Select all that apply All competitive markets involve which of the following?
-price -quantity -supply -demand
Which of the following does not exemplify an improvement in technology affecting supply?
Increased subsidies to farmers for producing more corn
What are two goods called when a change in the price of one good has little or no effect on the demand for the other?
Independent goods
At equilibrium quantity, which of the following is true?
The quantity demanded equals quantity supplied.
Select all that apply Which of the following statements are true?
-A decrease in consumers' income would decrease the demand for a normal good. -An increase in the price of a normal good would decrease the quantity demanded of the good.
Select all that apply Which of the following would likely increase the demand for a normal good? (Check all that apply.)
-A decrease in the price of complementary goods -An increase in the number of buyers
Select all that apply Which of the following factors increase the demand for any good or service?
-A rise in consumer income if the product is a normal good -An increase in the number of buyers -An increase in the price of a substitute good
Select all that apply According to the law of demand, which of the following statements are true, all other things being equal?
-As price decreases, quantity demanded increases. -As price increases, quantity demanded decreases.
Select all that apply Which of the following types of goods affect the demand for another product due to a change in their price? (Select all that apply)
-Complementary goods -Substitute goods
Select all that apply Which of the following are determinants of demand?
-Consumer income -Consumer expectations -Consumer tastes -Number of buyers -Prices of related goods
Select all that apply Which of the following exemplify a decrease in the demand for goods due to a decrease in the number of buyers?
-People leaving the small towns where they grew up to look for job opportunities -People retiring and leaving the cities where they worked
Select all that apply In which of the following situations do governments intervene to prevent prices from rising above or falling below their equilibrium levels?
-Prices are too low for firms. -Prices are too high for consumers.
Select all that apply Choose all of the following that will cause a change in supply, not quantity supplied.
-Producer expectations -Number of sellers -Technology
Select all that apply Which of the following are determinants of supply?
-Producer expectations -Prices of other goods -Taxes and subsidies
Which of the following are the characteristics of a competitive market?
-Standardized products -A large number of buyers and sellers
Select all that apply Which of the following are determinants of supply? (Check all that apply.)
-Taxes and subsidies -Resource prices -Technology
Select all that apply Which are reasons for changes in buyer tastes?
-The results of health studies -The introduction of products -The development of new technology
Select all that apply In general, what goals does the improvement of production techniques help companies to achieve?
-Use fewer resources per unit of output -Lower production costs -Increase supply
Select all that apply Which of the following illustrates the relationship between a good and its complement?
-When the price of lettuce increases, the demand for salad dressing decreases. -When the price of tuition decreases, the demand for textbooks increases.
Select all that apply Government-controlled prices cause ______.
-shortages -surpluses -distortions in resource allocation
In the marketplace, what is a good that is used together with another good?
A complementary good
Which of the following would most likely lead to a decrease in demand?
A decrease in the number of buyers
_____,while holding demand constant, results in an increase in the equilibrium price of the good, but a decrease in the equilibrium quantity of the good.
A decrease in the supply of a good
Which exemplifies a pair of complementary goods?
A hot dog and relish
Which of the following in the rental market for housing benefits renters, but makes it unprofitable for suppliers or landowners?
A price ceiling
An increase in equilibrium quantity and indeterminate change in equilibrium price is a result of which of the following?
A simultaneous increase in supply and demand
Which of the following refers to government financial assistance for the production of a good which lowers producers' costs and increases supply?
A subsidy
In the marketplace, what is a good that can be used in place of another good called?
A substitute good
Which of the following refers to a particular apportionment or mix of goods and services most highly valued by society?
Allocative efficiency
Which statement about demand and supply is true?
An increase in consumer income is likely to increase the demand for a normal good.
Which of the following exemplifies a change in buyers' tastes?
An increase in demand for digital cameras over 35mm cameras.
A decrease in equilibrium price and indeterminate result on equilibrium quantity is a result of which of the following?
An increase in supply and a simultaneous decrease in demand
Which of the following causes consumers to buy large quantities of a product at each possible price?
An increase in the number of buyers
Which of the following is likely to cause an increase in the demand for a good or service?
An increase in the number of buyers
The prices of the resources-- (one word) used in the production process help determine the costs of production incurred by firms.
Blank 1 resources
--benefit is the additional utility gained from consuming one more unit of a good or service.
Blank 1: Marginal
A price-- (floor/ceiling) is the maximum legal price a seller may charge for a product or service.
Blank 1: ceiling or cap
A shortage results from an excess of quantity-- . (Enter one word in the blank.)
Blank 1: demanded
At the equilibrium price, quantity-- equals quantity-- . (Enter only one word per blank.)
Blank 1: demanded or demand Blank 2: supplied or supply
The interaction between buyers and sellers determines the equilibrium price and the-- quantity. (Answer in one word.)
Blank 1: equilibrium
The-- output is the quantity at which quantity demanded equals quantity supplied in a competitive market. (Enter one word in the blank.)
Blank 1: equilibrium
At the market-- price, quantity demanded equals quantity-- . (Enter one word in each blank.)
Blank 1: equilibrium or clearing Blank 2: supplied or produced
Government may place legal limits on prices when it is determined that prices are unfairly-- (high/low) for buyers or unfairly-- (high/low) for sellers.
Blank 1: high, increasing, or rising Blank 2: low, reducing, decreasing, or falling
A favorable change in consumer tastes and preferences for a product-- will demand, shifting the demand curve to the-- (right/left).
Blank 1: increase or raise Blank 2: right or rightward
In general, a firm will-- (increase/decrease) the output of a good or service if the price of the good is rising.
Blank 1: increase, raise, expand, or boost
If costs of production rise, the producer has an incentive to produce --(one word) output.
Blank 1: less, lower, fewer, decreased, reduced, lesser, or low
The equilibrium price where the quantity demanded equals the quantity supplied is otherwise known as the-- price. (Enter one word in each blank.)
Blank 1: market Blank 2: clearing
Market-- is a schedule or curve showing the various amounts of a product that producers are willing and able to make available for sale at each possible price during a specific period.
Blank 1: supply
The number of sellers or competitors in a market is a determinant or shifter of the-- (one word) curve.
Blank 1: supply
The prices of substitute goods in production is a determinant of--
Blank 1: supply
Producer expectations of future prices are a determinant of-- (one word).
Blank 1: supply or production
How do improvements in productive technology enable firms to produce more units of output?
By utilizing fewer resources, thereby lowering costs
Which of the following shows the effects on equilibrium price and quantity due to an increase in supply and a simultaneous decrease in demand?
Equilibrium price falls and the change in equilibrium quantity is indeterminate.
Which of the following describe the effects on equilibrium price and equilibrium quantity as a result of a decrease in supply and a simultaneous increase in demand?
Equilibrium price rises and the change in equilibrium quantity is indeterminate.
True or false: A change in supply is represented by a movement along the curve, not a shift of the curve.
False
True or false: A shortage occurs when quantity supplied exceeds quantity demanded.
False
True or false: An increase in the sales, property or any other tax will decrease production costs and increase supply.
False
True or false: For many people, Coke and Pepsi are complements.
False
True or false: A price at or above the price floor is illegal.
False =reason: A price at or above the price floor is legal; a price below it is not legal, hence the reason for a floor on the price, meaning the price cannot fall below the floor.
Which of the following causes shortages or surpluses, distortions in resource allocation, and negative side effects?
Government-controlled prices
Which of the following is a complement to hamburger patties?
Hamburger buns
______ resource prices raise production costs and, assuming a fixed product price, ______ profits.
Higher; reduce
Which of the following statements correctly describes the relationship between the price and quantity demanded of a good or service?
Holding all else constant, as price increases, quantity demanded decreases and as price decreases, quantity demanded increases.
Which of the following would increase the demand for goods and services in the United States?
Large-scale immigration
What is the additional utility gained from consuming one more unit of a good or service?
Marginal benefit
Which of the following are substitutes?
Pepsi and Coca-Cola
Which of the following specifically refers to demand?
The buyer side of any market
What is the price where the intentions of buyers and sellers match?
The equilibrium price
What determines market price and equilibrium output in a market?
The interaction of buyers and sellers
Other things equal, which of the following is correct regarding increasing the number of sellers in an industry?
The market supply becomes greater
What does allocative efficiency refer to?
The particular mix of goods most highly valued by society
True or false: A surplus is when quantity supplied exceeds quantity demanded.
True
True or false: Resource costs or changes in the costs of production are responsible for shifts of the supply curve.
True
True or false: When the price of one product rises, the demand for its substitute will increase.
True
True or false: The law of demand can be supported by the income effect.
True Reason: The law of demand can be explained through the income effect because our willingness and ability to consume are directly related to the effect that prices have on the purchasing power of our income.
A decrease in demand while holding supply constant results in ______ in both equilibrium price and quantity.
a decline
A decrease in demand while holding supply constant results in _______.
a decrease in both equilibrium price and quantity
The inverse relationship between price and quantity demanded can be graphically illustrated by ______.
a downward sloping curve
The willingness and ability of a consumer to buy a normal product falls because of ______.
a fall in income
An increase in the equilibrium price of a good and an indeterminate change in the equilibrium quantity is the result of ______.
an increase in demand and decrease in supply
The effects on equilibrium price and quantity due to an increase in supply and simultaneous increase in demand are shown by ______.
an increase in the equilibrium quantity and an indeterminate change in price
The supply curve is ______ sloping curve.
an upward
The law of demand is consistent with common sense because people ordinarily ______.
buy more at a low price
The rationing function of prices refers to the ability of the competitive forces of supply and demand to establish a price at which ______.
buying and selling decisions are consistent
Price controls or ______ mandated in the apartment rental market benefit the consumer by establishing a price ______ the free market equilibrium price.
ceilings; below
A ______ good is one that is used together with another good.
complementary
The concept of demand can be summarized by a schedule or curve showing the quantity of a product that would be ______.
consumed at various possible prices
One of the determinants of demand is ______ expectations.
consumer
The ___ incurred by firms when producing a good or service arise from the prices of the inputs that are used to produce said good or service.
costs of production
When the price of a product falls, demand for its substitute will _______.
decrease
An increase in business taxes causes a(n) ______ in supply and will ______ production costs.
decrease; increase
An unfavorable change in consumer tastes and preferences for a product will ______ demand, which is illustrated as a shift of the demand curve to the ______.
decrease; left
A change in the number of buyers is a determinant of market-- . (Use only one word for the blank.)
demand
Consumer expectations are a determinant of-- (one word).
demand
The inverse, or negative, relationship between price and quantity demanded is known as the law of ______.
demand
Consumers experience ______ marginal utility the more they consume of a particular good or service.
diminishing
Consumers will only buy additional units of a good if the price of the good is reduced is an example of ______.
diminishing marginal utility
According to the law of supply, price and quantity supplied have a(n) ______ relationship.
direct
When a price ceiling is established, the new price and quantity are now at ______.
disequilibrium =because it destabilized the natural supply and demand flow
Changes in ______ about the future price of a product may affect the producer's current willingness to ______ that product.
expectations; supply
If a decline in demand is greater than an increase in supply, the equilibrium quantity will ______.
fall
If an increase in supply is greater than an increase in demand, the equilibrium price will ______.
fall
Suppose the market for a good is in equilibrium. Assume that there is a decline in the supply of the good and an increase in the demand for the good. If the decline in supply is larger than the increase in demand, the equilibrium quantity will ______.
fall
A price-- (one word) is a minimum price fixed by the government, generally imposed above the equilibrium price.
floor
Producer expectations refer to firms' expectations of ______ for a good or service that they produce.
future prices
At any price above the equilibrium price, such as with a price floor, quantity supplied will be ______ the quantity demanded, resulting in a persistent excess supply or surplus of the product.
greater than
Which exemplifies a pair of substitute goods?
hot dogs and hamburgers
In which of the following situations will quantity supplied exceed the quantity demanded?
in the imposition of a price floor.
Which of the following affects the demand for normal goods and inferior goods?
income
Which of the following is a determinant of demand?
income
If the birthrate increases, the purchase of baby products is likely to ______.
increase
Other things equal, if consumers believe that gas prices will rise in a week, the demand for gas today will ______.
increase
Suppose Coke and Pepsi are substitutes. When the price of Coke rises, the demand for Pepsi is likely to ______.
increase
If producers expect lower prices for their goods or services in the future, they will ______ now, which is illustrated by a shift of the supply curve to the ______.
increase their supply; right
A decrease in supply while holding demand constant results in a(n) ______ in equilibrium price, and a(n) ______ in equilibrium quantity.
increase; decrease
An increase in the sales, property, or any other tax will ______ production costs and ______ supply.
increase; decrease
Greater resource prices _______ the costs of production, thereby, ______ the incentive for firms to produce the good at each price.
increases; reducing
Government subsidies of the production of a good has the effect of ______.
increasing supply
The vast majority of goods that are not related to one another are called ______ goods.
independent
A demand curve shows the ______.
inverse relationship between price and quantity demanded for a product
The ______ is consistent with common sense because people ordinarily do buy more of a product at a lower price.
law of demand
A price ceiling is the maximum legal price a seller may charge for a product or service where a price at or below the ceiling is ______ and a price above the price ceiling is ______.
legal; illegal
Diminishing marginal utility states that less satisfaction is derived from each successive unit of a product consumed. Therefore, the law of demand is upheld because, as each successive unit yields ______, consumers will buy additional units only if the price of those units is progressively ______.
less and less utility; reduced
The income effect indicates that a ______ price increases the purchasing power of income, enabling consumers to purchase ______ of a product and vice versa.
lower; more
If the government subsidizes the production of a good, it in effect ______ the producers' costs and ______ supply.
lowers; increases
Other things equal, firms will produce and offer for sale ______ of their product at a high price than at a low price.
more
On a simple supply model, a change in quantity supplied is illustrated by a ______ and a change in supply is illustrated by a ______.
movement along the supply curve; shift of the supply curve
The relationship between the price of a good or service and the quantity demanded of that good or service described by the law of demand is
negative
Other things equal, when price falls, the quantity demanded rises. This represents the ______ relationship between the price and quantity demanded.
negative, or inverse,
Upon receiving a substantial raise, Jessie increased her monthly consumption of beef. This information best exemplifies the relationship between income and a(n) ______.
normal good
As people's income increases, the demand for ______ goods goes up but the demand for ______ goods goes down.
normal; inferior
The determinants of the supply of a good are any factors other than the product's ______ that cause the supply curve of the good to shift.
price
When drawing a supply curve, _____ is labeled on the vertical axis.
price
Which of the following has the greatest effect on the quantity supplied?
price
The supply curve illustrates the relationship between ______.
price and quantity supplied
All the following are the determinants of demand except ______.
price of substitutes in production
The determinant of supply dealing with alternative products that can be produced by firms is called ______.
price of substitutes in production
The production of a good or service in the least costly way is known as ______ efficiency.
productive
Competition among corn producers forces them to use the best technology and right mix of productive resources; otherwise their costs will be too high relative to the market price and they will be unprofitable. This is best described as ______.
productive efficiency
The price of ______ goods is a determinant of demand.
related
Due to the substitution effect, buyers have an incentive to buy less expensive products in place of similar products that have become ______.
relatively more expensive
A change in ______ causes the supply curve of a product to shift leftward or rightward.
resource prices
If an increase in supply is larger than a decrease in demand, the equilibrium quantity will ______.
rise
If the increase in demand is greater than the decrease in supply, the equilibrium quantity will ______.
rise
If the increase in demand is greater than the increase in supply, the equilibrium price will ______.
rise
If prices for a good or service are expected to increase in the future, the demand for that good or service will ______ today. If prices are expected to decrease in the future, demand will ______ today.
rise; fall
The law of supply states that as price ______, the quantity supplied (Qs) rises; as price ______, the quantity supplied falls.
rises; falls
When a price ceiling is enacted, the new price is established below the old equilibrium price, quantity demanded ______ and quantity supplied ______ thus creating disequilibrium.
rises; falls
A ______ the demand curve represents a change in demand while a ______ the demand curve represents a change in the quantity demanded.
shift of; movement along
A change in demand is represented by a ______ the demand curve while a change in quantity demanded is represented by a _______ the demand curve.
shift of; movement along
The ______ suggests that at lower prices, buyers have an incentive to substitute less expensive products for similar products that are now relatively more expensive.
substitution effect
When a product's demand varies directly with money income, it is considered a(n) ______ good.
superior
The supply curve measures quantity ______ on the horizontal axis and ______ on the vertical axis.
supplied; price
A surplus is also known as excess ______.
supply
Improvements in technology is a determinant of ______.
supply
The ability of the competitive forces of supply and demand to establish a price at which selling and buying decisions are consistent is called ______.
the rationing function of prices
Diminishing marginal ______ states that, in any specific time period, buyers will derive less satisfaction from each additional unit of the product consumed.
utility