Chapter 3: Supply and Demand

Firms are willing and able to sell 100 guitars per day at a price of $250 per guitar. What price will firms require to sell 100 guitars per day if there is a tax of $15 per guitar?

$265

producer surplus

The difference between the market price and the minimum price at which a seller is willing to sell a certain quantity of a good

Which of the following would cause the demand for hot dog buns to increase?

a fall in the price of hot dogs

Total consumer surplus is measured by the area _____ and _____ the price.

below the demand curve; above

Imagine that millions of refugees move out of country A and into country X. This would cause the demand for housing in country A to _____ and the demand for housing in country X to _____.

decrease; increase

If the price of a good's complement rises, _____ for the good whose price did not change will decrease.

demand

As the price of lead falls (a key input in the production of automobile batteries), the costs of producing batteries decreases, shifting the supply curve of batteries:

down and to the right.

Quantity demanded:

is the amount that buyers are willing and able to buy at a particular price.

Consumer surplus

is the difference between the maximum price a consumer is willing to pay for a good or service and its market price.

Consumer surplus is the difference between the _____ the consumer is willing to pay for a good and the market price.

maximum price

The quantity of DVDs that people plan to buy this month will increase when:

movie theater ticket prices increase.

The demand curve:

shows how much buyers are willing and able to buy at different prices.