SMARTBOOK: UNIT 2

Which statement about demand and supply is true?

An increase in consumer income is likely to increase the demand for a normal good.

Fill in the blanks. With a market failure, consumers can be harmed with a loss of _____ surplus and/or producers can be harmed by a loss of _____ surplus.

Blank 1: consumer Blank 2: producer

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

A vast majority of goods that are not related to one another are called _____ goods.

Blank 1: independent or unrelated

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

According to the law of supply, price and quantity supplied have a(n) (positive/negative) relationship.

Blank 1: positive or direct

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

Which of the following are determinants of demand? Consumer expectations Prices of related goods Number of buyers Consumer tastes Corporate taxes and subsidies Resource prices Consumer income

Consumer expectations Prices of related goods Number of buyers Consumer tastes Consumer income

True or false: A complementary good is one that is used in place of another good.

False

True or false: If the demand for a good increases when consumer incomes rise, then the good is considered an inferior good.

False

True or false: In the supply and demand model, quantity demanded is illustrated on the vertical axis, while price is illustrated on the horizontal axis.

False

Which of the following is a determinant of demand?

Income

Which of the following are determinants of demand? Number of buyers Consumer income Corporate taxes and subsidies Prices of related goods Consumer expectations Resource prices Consumer tastes

Number of buyers Consumer income Prices of related goods Consumer expectations Consumer tastes

Which of the following are substitutes?

Pepsi and Coca-Cola

Which of the following has the greatest effect on the quantity supplied?

Price

From an economic perspective, which of the following are true of a market? Some markets are local, whereas some markets are national or international. In a market, buyers and sellers interact to buy and sell goods or services. A market is a location that is utilized only to hold excess producer supplies and inventories. In a market, buyers and sellers make strategic decisions to make themselves better off.

Some markets are local, whereas some markets are national or international. In a market, buyers and sellers interact to buy and sell goods or services. In a market, buyers and sellers make strategic decisions to make themselves better off.

Which of the following types of goods affect the demand for another product due to a change in their price? (Select all that apply) Multiple select question. Substitute goods Complementary goods Inferior goods Normal goods

Substitute goods Complementary goods

Which of the following specifically refers to demand?

The buyer side of any market

True or false: A substitute good is one that is used in place of another good.

True

True or false: An increase in the number of buyers in a market, ceteris paribus, is likely to increase demand.

True

The supply curve is ______ sloping curve.

an upward

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

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

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 _____.

demand

Two causes of market failures are

externalities and public goods

The vast majority of goods that are not related to one another are called ______ goods.

independent

Products that have decreased demand when consumer incomes rise and increased demand when consumer incomes fall are called ______ goods.

inferior

When two variables are being examined, and one variable moves one way and the other variable moves in the opposite direction, this is called a(n):

inverse relationship

An e-commerce site, a gas station, a local music store, and a farmer's roadside stand are all examples of a familiar _____ . (Type only one word in the blank.)

market or marketplace

An inverse relationship between two variables is a(n) ______ relationship.

negative

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

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 price of ______ goods is a determinant of demand.

related

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 supply curve measures quantity ______ on the horizontal axis and ______ on the vertical axis.

supplied; price