Ch.3 ECON SBLS

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.

The demand for a normal good would likely increase in which of the following cases? An increase in the number of buyers A decrease in the price of complementary goods A decrease in consumer income An increase in the price of the good

An increase in the number of buyers A decrease in the price of complementary goods

Which of the following reasons is NOT an explanation for why the demand curves slopes downward and to the right? The income effect The law of demand The substitution effect As price of the vertical axis increases, quantity demanded on the horizontal axis remains unchanged As price on the vertical axis decreases, quantity demanded on the horizontal axis increases As prices on the vertical axis increase, quantity demanded on the horizontal axis decrease

As price of the vertical axis increases, quantity demanded on the horizontal axis remains unchanged

T/F: Changes in the determinants of demand will cause a movement along the demand curve

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 are determinants of demand?

Price of related goods Number of buyers Consumer tastes Consumer expectations

which of the following are determinants of supply?

Resource prices Taxes and subsidies Technology

Which of the following specifically refers to demand?

The buyer side of any market

T/F: Equilibrium price is the price where the intentions of buyers and sellers match.

True

T/F: Other things equal, as a buyer's income rises, the willingness and ability to buy a normal product increases.

True

A decrease in demand while holding supply constant result in _____ in both equilibrium price and quantity.

a decline

The inverse relationship between price and quantity demanded can be shown graphically by ______ sloping curve.

a downward

which of the following refers to government financial assistance for the production of a good which lowers producers' costs and increases supply?

a subsidy

which of the following refers to a particular apportionment or mix of goods and services most highly valued by society?

allocative efficiency

the supply curve is _____ sloping curve

an upward

the price actually paid for a good is not reflected in the demand because demand is merely a statement of ______ buying of the good.

buyers' intentions regarding the

what are the characteristics of a competitive market?

buying and selling standardized products. a large number of buyers and sellers acting independently

a price _____ (floor/ceiling) if the maximum legal price a seller may change for a product or service.

ceiling

The determinants of demand, other things equal, are assumed to be ______ when a demand curve is drawn or computed.

constant

one of the determinants of demand is _____ expectations.

consumer

When the price of a product falls, demand for its substitute will ______.

decrease

An increase in supply while holding demand constant results in a(n)______ in equilibrium price, but a(n)_______ in equilibrium quantity.

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

Change in the number of buyers is a determinant of market _____.

demand

The inverse, or negative, relationship between price and quantity demanded is known as the law of ______.

demand

A shortage results from an excess of quantity _______ (one word)

demanded

Consumer experience ______ marginal utility the more they consume of a particular good or service

diminishing

If an increase in supply is greater than an increase in demand, the equilibrium price 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 price

Which exemplifies a pair of substitute goods?

hot dogs and hamburgers

Higher resources prices ______ (increase/decrease) the costs of production.

increase

When the price of coke rises, the demand for pepsi is likely to ________(one word).

increase

the general, a firm will ______ (increase/ decrease) the output of a good or service if the price of the good is rising

increase

which of the following does not exemplify an improvement in technology affecting suppy?

increase subsidies to farmers for producing more corn

A decrease in supply while holding demand constant results in a(n)______ in equilibrium price, and a(n)_______ in equilibrium quantity

increase; decrease

A vast majority of goods unrelated 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

The demand curve shows the _____.

inverse relationship between price and quantity demanded for a product

the added cost of producing one more unit of output is called ______ cost.

marginal

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

negative

The law of demand describes a _____ (positive/negative) relationship between the price of a good or service and the quantity demand of that good or service.

negative

The law of demand describes a ______ (positive/negative) relationship between the price of a good or service and the quantity demanded of that good or service.

negative

when drawing a supply curve, ______ is labeled on the vertical axis.

price

in which of the following situations do governments intervene to prevent prices from rising above or falling below their equilibrium levels?

prices are too high for consumers. prices are too low for firms

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

The prices of the ______ (one word) used in the production process help determine the cost of production incurred by firms.

resources

the law of supply states that as price ______, the quantity supplies (Qs) rises; as price ______, the quantity supplied falls.

rises; falls

a change in demand is represented by a _____ the demand curve while a change in quantity demand is represented by a _____ the demand curve.

shift of: movement along

The market demand curve is the _______ demand curves for a good or service

summation of all individual

Products whose demand varies directly with changes in money income are called normal or ________ (one word) goods.

superior

A surplus is also known as excess ________.

supply

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.

supply

the number if sellers or competitors in a market is a determinant or shifter of the ______ (one word) curve.

supply

the prices of substitute goods in production is a determinant of ______.

supply

what determines market price and equilibrium output in a market?

the interaction of buyers and sellers

True or false: Resource costs of changes in these costs to production are responsible for shifts in the supply curve.

true