ECON 202 Ch 3 Smartbook

A market economy is

organized by private decision-making individuals.

The prices of related goods, the income of consumers, and the number of buyers in a market are all considered non - determinants of demand. (Enter only one word in the blank.)

price

For an inferior good, if consumers' incomes increase,

demand will shift left.

If the number of buyers falls,

demand will shift left.

The convergence of supply with demand happens at a point called the market

equilibrium

'Ceteris paribus' is

the first requirement for the law of demand.

The inverse relationship between price and quantity demanded is referred to as

the law of demand.

If one of the non-price factors that determines demand changes, the demand curve will -(one word).

shift

Which of the following are characteristics of a competitive market?

A standardized good Price-taker No transaction costs Full information

Which of the following describe(s) a normal good?

Demand for the good increases as income increases. Demand for the good decreases as income decreases

True or false: When the number of buyers increases, the demand will decrease.

False

Non-price determinants affect the quantity demanded at - price

each

True or false: If the price of corn increases, the quantity of wheat (the substitute) a farmer is willing to grow falls.

True

For a normal good, increases in income will cause

demand to increase.

Suppose a phone company advertises an annual sale next month. They can expect that, this month,

demand will decrease.

Full information, standardized goods, and no transaction costs are characteristics of

a competitive market

A demand curve is

a curve showing the price-quantity combinations of the demand schedule.

A table showing the quantities of a particular good or service that consumers are willing and able to purchase at various prices is

a demand schedule.

In economics, buyers and sellers who trade a particular good or service are referred to as

a market

When income increases and demand shifts right, the good is

a normal good.

A good for which any two units have the same features and are interchangeable is called

a standardized good

Market demand is determined by

adding up all of the individual demand curves

'Ceteris paribus' means

all other things are assumed to be the same.

A standardized good is a good for which

any 2 units have the same features.

Suppose that in addition to reducing the cost of production, new battery technology makes cell phones operate more efficiently. In the market for cell phones,

both the demand curve and the supply curve will shift to the right.

A price taker refers to a buyer or seller who

cannot affect the market price through consumption or production decisions.

A perfectly - market is one in which well-informed, price-taking buyers and sellers easily trade a standardized good or service.

competitive

Suppose you always eat peanut butter with jelly and you never eat jelly without peanut butter. In this case, peanut butter and jelly are

complements.

The personal likes and dislikes that make buyers more or less inclined to purchase a good are

consumer preferences.

- describes how much of something people want to buy under certain circumstances.

demand

If research shows that almonds reduce the occurrence of cancer,

demand for almonds will shift right.

All else equal, if goods A and B are complements and the price of good A doubles while the price of good B stays the same,

demand for good B will decrease.

If goods A and B are substitutes, and the price of good A doubles while the price of good B stays the same,

demand for good B will increase.

If consumers expect prices to fall in the future,

demand now will decrease.

For an inferior good, increases in income will cause

demand to decrease.

If a breakthrough in battery technology enabled cell phone manufacturers to construct phones with the same battery life for less money, then in the cell phone market:

equilibrium price decreases and equilibrium quantity increases

Suppose that in addition to reducing the cost of production, new battery technology makes cell phones operate more efficiently. In the market for cell phones

equilibrium quantity will increase, but we cannot predict the change in equilibrium price.

Along the demand schedule it is assumed that

factors other than price remain the same.

The demand schedule assumes that

factors other than price remain the same.

In a competitive market, you have

full information about the price and features of the good being bought and sold.

Improved technology causes quantity supplied to

increase at each price.

If the price of land-line phone service suddenly skyrockets, then in the cell phone market, ________.

the equilibrium price and quantity will increase

For - goods, as income increases, demand decreases.

inferior

An economy organized by private individuals making decisions, rather than a centralized planning authority is referred to as a free - economy.

market

If we add up all of the individual choices of consumers, we get overall

market demand.

According to the law of demand, price and quantity are _______ related.

negatively

When there is a shift of the demand curve,

nonprice determinants affect the quantity demanded at each price.

If a decrease in income causes a decrease in demand for a good, the good is

normal

The price of related goods determines supply because it affects the

opportunity cost of production.

A change in quantity supplied is due to a change in _______.A change in supply is due to a change in _________.

price; non-price determinants of supply

The nonprice determinants of supply that shift supply include

prices of related goods. the number of sellers. producer expectations. prices of inputs. technology.

The concept of supply describes how much of a good or service

producers will offer for sale under given circumstances.

The amount of a particular good or service that producers will offer for sale at a given price during a specified period is the

quantity supplied.

According to the law of demand, when all else is held equal, quantity demanded - as price falls. (Enter one word in the blank.)

rises

When demand changes, it

shifts horizontally.

If the demand curve shifts, it must be the case that

something other than the price changed.

All else equal, if the demand for good B increases when the price of good A increases, the two goods are _____.

substitutes

Which of the following describes how much of a good or service producers will offer for sale under given circumstances.

supply quantity supplied

If production costs increase, producers are willing to

supply less of the product at each price.

If producers expect product prices to fall in the future,

supply of the product will increase now.

If a breakthrough in battery technology enabled cell phone manufacturers to construct phones with the same battery life for less money, then in the market for cell phones

supply would shift to the right.

When no buyer or seller can affect the market price, the buyer or seller is called a price -.

taker

Quantity demanded refers to

the amount of a particular good that buyers will purchase at a given price during a specified period

The downward-sloping demand curve reflects the trade-offs that people face between _____.

the benefit received from a good and the opportunity cost of buying it

In economics, the term market refers to

the buyers and sellers themselves.

From a realtor's perspective, when the price of real estate is expected to rise in the future,

the current supply of real estate will increase.

The nonprice determinants of demand can be divided into categories including:

the number of buyers in the market. expectations of future prices. consumer preferences consumers' incomes. the prices of related goods.

Consumer preferences are

the personal likes and dislikes that make buyers more or less inclined to purchase a good.

When there is a shortage,

the quantity supplied is lower than the quantity demanded.

When nonprice determinants affect the quantity supplied at each price,

the supply curve shifts.

When there is a change in one of the nonprice determinants of supply,

the supply curve shifts.

Two goods are substitutes when

they serve similar purposes.

In competitive markets, there are no - costs.

transaction

In a competitive market, _____________ easily trade a standardized product

well-informed, price-taking buyers and sellers

When there are no transaction costs,

you don't have to pay anything for the privilege of buying or selling in the market.