chapter 3
A perfectly competitive market is a market that meets the conditions of
(1) many buyers and sellers, (2) all firms selling identical products, and (3) no barriers to new firms entering the market.
According to the law of supply,
A and C only
Which of the following would cause a shift in the demand curve from point A to point B?
All of the above
Consider the figure to the right and assume that it is the market for health-care services. When the "baby boomer" generation retires, the number of people who require health care increases by 30%, and, as a result, the number of health-care providers also increases, but by only 25%. What is the effect on the price of health-care services over time?
It increases because demand increased by more than supply.
According to the law of demand , there is an inverse relationship between price and quantity demanded. That is, the demand curve for goods and services slopes downward. Why?
When the price of a good increases, consumers' purchasing power falls, and they cannot buy as much of the good as they did prior to the price change.
Which of the following events would cause the supply curve to increase from Upper S 1 to Upper S 3
a decrease in the price of inputs
In general, the term "ceteris paribus" means
all else equal
Market price is determined by
both supply and demand
On the diagram to the right, a movement from A to C represents a
change in demand
on the diagram to the right, a movement from b to c represents
change in supply
The diagram in panel b is an example of
demand schedule Demand schedule A table showing the relationship between the price of a product and the quantity of the product demanded. Quantity demanded The amount of a good or service that a consumer is willing and able to purchase at a given price. Demand curve A curve that shows the relationship between the price of a product and the quantity of the product demanded. Market demand The demand by all the consumers of a given good or service.
In the diagram to the right, point A provides the _____, point B the _____, and point C the
equilibrium price; market equilibrium; equilibrium quantity
"An increase in supply decreases the equilibrium price. The decrease in price increases demand."
false: decreases in price affect the quantity demanded, not demand.
fill in the blanks
increase, increase, indeterminate and decreases
supply decreases equilibrium price will
shortage rise, fall
$29 per player
shortage, 56
The distinction between substitutes and complements is
substitute goods are used for the same purposes while complementary goods are used together.
the diagram in panel a is an example of
supply schedule
in the diagram to the right when demand decreases Equilibrium price will
surplus fall and fall
According to the law of demand
there is an inverse relationship between price and quantity demanded.
The distinction between a normal and an inferior good is
when income increases, demand for a normal good increases while demand for an inferior good falls.
