Chapter 3 Learning Demand, Supply and Market Equilibrium

Which of the following recalls the meaning of a change in supply?

A change in the schedule and a shift of the curve

A change in demand come from a change in consumers' mind because of:

a change in a determinant of demand other than price

(blank) causes a decrease in demand

a decrease in the number of the buyers in market

consumer expectation is a determinant of (blank)

demand

A demand curve measures quantity (blank) on the horizontal axis and (blank) on the vertical axis

demanded; price

The "other things equal" assumption in the relationship between price and quantity demanded are referred to as the:

determinant of demand

Consumer experience (blank) marginal utility the more they consume a particular good or service

diminishing

Greater resource prices (blank) the costs of production, thereby, (blank) the incentive for firms to produce the goods at each price

increase; reducing

A change in quantity demanded Qd is caused by an increase or decrease in the (blank) of the product under consideration and nothing else

price

Which of the following is likely to cause an increase in the demand for a good service?

increase in the number of buyers

A change in quantity supplied is caused by an increase or decrease in the (blank) of the product under consideration and nothing else

price

Only a supply curve, (blank) is labeled on the vertical axis

price

Which of the following statement is true?

1. A decrease in consumers' income

Which of following statements are true?

1. An decrease in consumers income would decrease the demand for a normal good 2. an increase in the price of a normal good would decrease the quantity demanded of the good

Which of the following illustrates the relationship between a good and its complement?

1. When the price of tuition decreases, the demand for textbooks increase 2. When the price of lettuce increases, the demand of salad dressing decreases

Which of the following type of goods affect for another product due to change in their price

1. complementary goods 2. substitute goods

If the government of a country subsidizes the production of a good, it:

1. lower cost of production 2.increase supply

If the government of a country subsidizes the production of a good, it

1. lowers the cost of production 2. increase supply

Which of the following is the determinant of supply?

1. taxes and subsidies 2. producer and expectation 3. price of other goods

Which of the following is true?

1.A decrease in consumers' income would decrease the demand for a normal good 2. An increase in the price of normal good would decrease quantity demanded for the good

Which of the following statement describe the law of demand?

1.All other things being equal, as price decreases, quantity demanded increase 2.) All other things being equal, as price increase, quantity demanded decrease

Which of the following are determinants of demand?

1.consumer income 2. Consumer taste 3. consumer expectations 4.prices of related goods 5.Number of buyer

(blank) causes a decrease in demand

A decrease in the number of buyers in a market

Which of the following cause of consumers to buy larger quantities of a product at each possible price?

An increase in the number of buyers

T/F in general, a rise in income causes a decrease in demand for most products and a fall income causes an increase in demand for most products, other things equal

False

In general, a rise in income causes a decrease in demand for most products and a fall in income causes an increase in demand for most products, other things equal.

False

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

True

The price of a new cars and the sale of the new car represent:

an inverse relationship

The supply curve is (blank) sloping curve

an upward

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

constant

The (blank) incurred by firms when producing a good or service arise from the prices of the inputs that are used to produce said good or service.

cost of production

Other things equal, if consumers believe that the price of gas will fall next week, the demand for gas today will likely (blank)

decrease

Other things equal, if consumers believe that the price of gas will fall next week, the demand for gas will most likely

decrease

Other things equal. if consumers believe that the price of gas will fall next week, the demand for gas today will likely

decrease

When the price of a product fails, demand for its substitutes will

decrease

Which of the following would most likely lead to decrease in demand?

decrease in the number of buyer

An increase in business taxes cause a(n) (blank) in supply and will (blank) production costs

decrease; increase

An increase in business taxes cause a(n) (blank) in supply and will (blank) production cost

decrease;increase

The "other-things-equal" assumption is important to the law of demand because:

factor other than the price of the product affect the amount of a product purchased

As more firms enter an industry the supply curve shifts to the left

false

T/F Changes in the determinant of demand will cause a movement along the demand curve.

false

T/F For many people coke and Pepsi are complements

false

T/F In the supply and demand model, quantity demanded is illustrated on the vertical axis, while price is illustrated on the horizontal axis.

false

The inverse relationship between price and quantity demanded is called law of supply

false

Goods that are used together with other goods are called substitutes.

false (complements)

Which of the following of is a complement to hamburger patties?

hamburger buns

A change in the supply curve as a result of producers' expectations of future is best illustrated by farmers anticipating (blank) from the market now, causing decrease in supply

higher future wheat prices, potentially withholding some of their current wheat harvest

Which pair exemplifies substitute goods?

hot dogs and hamburgers

Which of the following affects the demand for normal goods and inferior goods?

income

Which of the following it the determinant of demands

income

In general, a firm will (blank) (increase/decrease) the output of a good or service if the price of the good is higher.

increase

Other things equal, if consumers believe that gas prices will rise in a week, the demand for gas today will (blank)

increase

A favorable change in consumer tastes and preferences for a product will (increase/ decrease) demand, illustrated as a shift of demand curve to the (right/left)

increase; right

A normal good is an item for which demand (blank) when income rises and (blank) when income falls.

increases; decreases

The vast majority of goods that are not related to one another are called (blank) goods

independent

Products that have decreased demanded when consumer incomes rise and increase demand when consumer income fall are called (blank) goods.

inferior

Other things equal, when price falls, the quantity demanded rises. This represents the (blank) relationship between the price and quantity demanded.

inverse

When two variables are being examined, and one variable moves one way and the other variable moves in the opposite direction, this is called an

inverse relationship

The demand curve shows the:

inverse relationship between price and quantity demanded for a product

If costs of production rise, the producer has an incentive to produce (blank) output

less

If the government subsidizes the production of a good, it in effect (blank) the producers' cost and (blank) supply

lowers; increase

The equilibrium price where the quantity demanded equals the quantity supplied is otherwise known as the (blank)- (blank) price.

market clearing

The determinant of the supply of a good are any factors other than the product's (blank) (price/ cost) that cause the supply curve of the good to shift

price

The determinant of supply dealing with alternative products that can be produced by firms called:

price of substitutes in production

An increase in the price of Coke will change the (blank) for Coke while an increase in the price of Pepsi will change the (blank) for Coke

quantity demand; and demand

When each additional worker of a firm produces less additional output than previously added workers, then the marginal cost of additional units of output:

rises

A (blank) the demand curve represents a change in demand while a (blank) the demand curve represents a change in the quantity demand

shift of; movement along

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

subsidy

Products whose demand varies directly with changes in money income are called normal or (blank)

superior

Products whose demand varies with changes in money income are called normal or (blank) goods

superior

Improvement in technology is a determinant of

supply

Improvements of technology is a determinant of

supply

The price of substitute goods that are used in production of a good is determinant of

supply

producers expectations of future prices are a determinant of (blank)

supply

For every good or service, the quantities demanded by individual consumers at every price are added together to compute:

the market demand curve for a good or service

Substitutes good and complementary goods refer to which determinant of demand?

the price of related good

Substitute goods and complementary goods refer to which determinant of demand?

the price of related goods

Substitute goods and complementary goods refer to which determinant of demands?

the price of related goods

T/F An increase in the number of buyers in a market, ceteris paribus, is likely to increase demand.

true