Microeconomics Ch. 3

Which of the following factors will lead to a decrease in demand

a decrease in the price of a substitute, a decrease in the population of potential buyers, and an increase in income for inferior goods

A change in quantity demanded is represented by

a movement along the demand curve

A change in the quantity supplied is represented by...

a movement along the supply curve

A change in supply is represented by...

a shift in the entire supply curve

Which of the following factors will lead to an increase in supply

a technological advance that lowers production costs and a decrease in the cost of inputs to the production process

Economic efficiency occurs when

all goods and services are produced and consumed at their socially optimal levels

Which of the following factors will lead to a decrease in supply

an expectation of higher prices in the future

If bread and peanut butter are complements, then a decrease in the price of peanut butter will lead to...

an increase in the amount of bread that people buy and an increase in the price of bread

If iPads are a normal good, then a fall in consumer income should lead to ______ in the demand for iPads

decrease

If the price of butter increases, the quantity of butter demanded will...

decrease

A schedule or graph showing the quantity of a good that buyers wish to buy at each price is know as a...

demand curve

The introduction of rent controls could lead to which of the following?

discrimination against tenants on the basis of race, religion, or other factors and poorer maintenance of rent-controlled apartments

Failure to achieve economic efficiency means that...

everyone in the economy could be made better off and total economic surplus is not maximized

A maximum allowable price specified by law is a

price ceiling

A change in demand is represented by a

shift in the entire demand curve

If the demand for apartments decreases when house prices falls, then this suggests that apartments and houses are...

substitues

The change in the quantity demanded of a good that results because buyers switch to or from substitutes when the price of the good changes is known as the _____ of a price change

substitution effect

The schedule or graph showing the quantity of a good that sellers wish to sell at each price is know as a...

supply curve

Buyer's surplus is....

the difference between a buyer's reservation price and the price the buyer actually pays

Seller's surplus is...

the difference between the price the seller receives and the seller's reservation price

An increase in the price of cotton is likely to shift the supply curve for clothing (that uses cotton as an input) to...

the left

Which of the following will a seller's reservation price generally be equal too?

the marginal cost of producing another unit of the good and the smallest dollar amount for which a seller would be willing to sell an additional unit

The social optimal quantity is...

the quantity of a good that maximized the total economic surplus that results from producing and consuming the good

If people tend to go swimming more in the summer than in the winter, then we would expect...

the quantity of swimsuits bought and sold to be higher in the summer, the demand for swimsuits to be higher in the summer, and the price of swimsuits to be higher in the summer

If Zach's reservations price for a gallon of milk is $5.53, and the market price for milk is $4.90, then Zach

will buy a gallon of milk

In which of the following situations is the market equilibrium likely to be economically inefficient

a market in which the consumption of the good entails a significant benefits to others (like vaccinations) AND a market in which the production of the good entails a significant cost to others (like pollution from the production process)