Microecon Ch:3 Quiz Review

Suppose the price of gasoline is $1.60 per gallon. Is the quantity demanded at the price of $1.60 per gallon higher or lower than the quantity demanded at the price of $1.40 per gallon?

Since the price of $1.60 is above the price of $1.40, the quantity demanded is lower. At the price of $1.40 per gallon, the quantity demanded is 600 gallons. At the price of $1.60 per gallon, the quantity demanded is 550 gallons. Since the price of $1.60 is above the price of $1.40, the quantity demanded at the price of $1.60 is lower than the quantity demanded at the price of $1.40.

True or false? The law of supply states that when there are many sellers of a good, an increase in price results in an increase in quantity supplied.

True All other factors being equal, when there are many sellers of a good, an increase in price results in an increase in quantity supplied, a relationship that is known as the law of supply.

What term best describes the relationship between units of a good demanded across a range of prices?

demand schedule A demand schedule is a table that shows a range of prices for a certain good or service and the quantity demanded at each price.

What term describes the total number of units of a good or service consumers are willing to purchase at a given price?

quantity demanded Quantity demanded is the total number of units of a good or service consumers are willing to purchase at a given price.

What term is best described as the total number of units of a good or service producers are willing to sell at a given price?

quantity supplied Quantity supplied is the total number of units of a good or service producers are willing to sell at a given price.

If producers and consumers agree on a market price, they have reached:

the equilibrium price Equilibrium price occurs where quantity supplied and quantity demanded and where producers and consumers agree on a price.

Market equilibrium is defined as ___________________.

the point where the supply curve and demand curve cross Market equilibrium is defined as the point where supply and demand cross or when quantity supplied equals quantity demanded.

The table below shows Jennifer's demand schedule for bottles of barbecue sauce. Choose the most accurate statement below.

As the price of barbecue sauce increases from $2 to $3, the quantity demanded of the sauce decreases from 12 units to 9 units. Law of demand says that as the price goes up, the quantity demanded goes down. We can examine the table and confirm that as the price of barbecue sauce increases from $2 to $3, the quantity demanded of the sauce decreases from 12 units to 9 units.

The price of coal rises in the market. According to the law of supply, what will happen?

More coal will be produced and made available for sale. The law of supply states that a higher price leads to a higher quantity supplied and a lower price leads to a lower quantity supplied. Since the price of coal rises, the law of supply predicts that more coal will be produced and made available for sale.

True or false? According to the law of demand, changing the price of sweater vests will only affect the quantity demanded, not demand itself.

True As demand is a schedule consisting of quantity and price combinations, changing the price of sweaters will move the consumer from one row or point in the demand schedule to another row or point. The demand schedule itself remains unchanged.

Jenna changes the amount of butter she purchases depending on whether it costs $3, $4, or $6 a pound. In order to derive her demand curve for butter, what other information do we need?

how much butter she buys at each price point The demand curve shows how much a person chooses to buy at different prices. In order to graph the curve, we need to know how much butter Jenna buys when it costs $3, $4, and $6.

Quantity supplied is a term that refers to _______.

the total number of units of a good or service producers are willing to sell at a given price Quantity supplied is the total number of units of a good or service producers are willing to sell at a given price. This is not to be confused with supply, which is the relationship between a range of prices and the quantities supplied at those prices. When economists refer to quantity supplied, they mean only a certain point on the supply curve, or one quantity on the supply schedule. In short, supply refers to the curve and quantity supplied refers to the (specific) point on the curve.