Economics Unit 3
In a free market economy, the decisions made by buyers and sellers push the price of a good or service toward the _____. price ceiling equilibrium price price floor
equilibrium price
price at which quantity supplied equals quantity demanded
equilibrium price
For several years in the late twentieth century, the government set the price of gasoline below the equilibrium price. This is an example of a _____. price floor price ceiling tax
price ceiling
when a price is set below the equilibrium price and not allowed to increase
price ceiling
when a price is set above the equilibrium price and not allowed to decrease
price floor
Minimum wage and farming price control are examples of _____. market-clearing prices price ceilings price floors
price floors
A supply curve for the car industry would show the quantity of cars supplied at different _____. marginal costs demands prices
prices
people who make goods and provide services
producer
good that can be used as a replacement for another good in the production process
production substitute
money left after all expenses are paid
profit
Your marginal cost is $4.00 and the market price for your good is $2.00. At this market price, you are willing to supply _________ goods.
zero
If the marginal cost of making a good is $3.00, then you would supply the good if the price was _____. $1.00 $2.00 $4.00
$4.00
You want to make a profit selling your new computer game. If it costs $30 to make the game, what price might you charge? $25 $40 $30
$40
Supply and Demand Schedule for a New Book Price Quantity Supplied Quantity Demanded $10 0 100 $20 40 50 $30 50 0 At a price of _____, books will be both supplied and demanded. $10 $20 $30
$20
At a price of $4, quantity supplied equals quantity demanded. This means that $4 is the _____. production price equilibrium price consumer price
equilibrium price
At a price of $65, consumers demand 650 pairs of shoes, and sellers supply 650 pairs of shoes. The price of $65 (where quantity supplied and quantity demanded both equal 650 pairs of shoes) is the _____. excess price equilibrium price quantity price
equilibrium price
You are in the airline business. The price of oil just doubled. How will this most likely affect the price of your airline tickets? The price will stay the same. The price will decrease. The price will increase.
The price will increase.
Sixty new grocery stores opened. This will __________ both the price and quantity of food in the marketplace.
affect
Competition in the cell phone market results in _____. poor customer service higher cell phone prices better quality cell phones
better quality cell phones
Your friend is a business owner in a planned economy. What decides how to allocate the productive resources he uses? price central authority
central authority
agreement between two or more people to limit competition and earn higher profits
collusion
contest between rivals
competition
The shoe industry has many sellers, many buyers, and similar products. Shoe companies function in a ___________ market.
competitive
The grocery store wants to increase the demand for ice cream cones, so it puts ice cream on sale. This shows that the grocery store owner thinks that ice cream and ice cream cones are _____. complements substitutes unrelated
complements
goods that go together
complements
someone whose wants are satisfied by using goods and services
consumer
The main factors that determine quantity supplied are price and _____. consumers' preferences costs of productive resources population growth
costs of productive resources
service provided to consumers during and after the buying process
customer service
quantity of a good or service that producers make and sell in the market
supply
An oil refinery makes both gasoline and diesel fuel. The price of gas has increased, which means that the supply of diesel fuel will most likely _____. increase decrease stay the same
decrease
Consumers' incomes decrease, which causes a decrease in demand. This causes the equilibrium price to _____. increase decrease stay the same
decrease
Many people in the town of Oldenburg moved to find jobs in other cities. This led to a population decrease and a(n) _________ in the demand for food.
decrease
Your business is dependent on gas to transport its goods. The price of oil decreases, which means your production costs _____. increase decrease stay the same
decrease
At the grocery store, you learn that the price of butter has increased by a lot. Many people respond by buying margarine. This makes the demand for butter _____ and the demand for margarine _____. decrease, increase increase, decrease stay the same, stay the same
decrease, increase
When the light bulb industry went from being a single-seller market to a competitive market, the price of light bulbs ____________ .
decreased
willing and able to consume
demand
graph that shows the relationship between price and quantity demanded
demand curve
table that shows the relationship between price and demanded
demand schedule
table that shows the relationship between price and quantity demanded
demand schedule
You go clothes shopping and find a great pair of jeans. They fit you perfectly, but they also cost $100. You are willing to buy them, but you only have $50 in your wallet to spend on new clothes. The pair of jeans _____ as demand for you. count might count do not count
do not count
point at which the supply and demand curves intersect
equilibrium point
more demand than needed
excess demand
At a price of $50, consumers demand 1,000 pair of shoes, and sellers supply 500 pairs of shoes. At $50, there is _____. excess demand (demand is greater than supply) excess supply (supply is greater than demand) no excess supply or demand
excess demand (demand is greater than supply)
more supply than needed
excess supply
At a price of $100, consumers demand 450 pairs of shoes, and sellers supply 800 pairs of shoes. At $100, there is _____. excess demand (demand is greater than supply) excess supply (supply is greater than demand) no excess supply or demand
excess supply (supply is greater than demand)
Supply for clothing decreased, which means that suppliers will now supply __________ clothes at each price level.
fewer
Demand for surfboards in Southern California is most likely ___________ than the demand for surfboards in Alaska.
greater
A supply curve for the car industry would show that automakers supply the most cars at the _____ price. highest lowest marginal
highest
money earned
income
Either more sellers in the market or lower production costs can cause supply to _____ at each price level. increase decrease stay the same
increase
Fifty new food businesses have entered the food market. The supply of food at each price level will _____. increase decrease stay the same
increase
You just received a raise at work and consider meat a normal good. This means that your demand for meat will _____. stay the same decrease increase
increase
expenses of productive resources
input costs
markets that are connected in a mutual way
interrelated markets
when a product's price rises, the quantity of the product demanded decreases, and when a product's price falls, the quantity of the product demanded increases
law of downward-sloping demand
Either a decrease in population or a decrease in income will cause consumers to demand _____ goods and services at each price level. more less the same
less
The price of gas just increased. This will most likely make people buy _____ gas in the future. the same amount of more less
less
The marginal cost of producing a pair of jeans is $25. At a price of $15, you will _____. lose money cover your costs earn a profit
lose money
You decided to charge $100 for your new computer game, but people are not buying it. What could you do to encourage people to buy your game? raise your price to $150 lower your price to $75 keep the price at $100
lower your price to $75
A producer charges $500 for a cell phone, but buyers are not buying any cell phones at this price. So at this price, the producer is willing to supply _____ phones, and consumers are willing to buy _____ phones. zero, many zero, zero many, zero
many, zero
cost of producing one more unit of a good
marginal cost
money earned by producing one more unit of a good
marginal revenue
economy in which market forces determine prices of resources and the prices and distribution of goods and services
market economy
price at which quantity supplied equals quantity demanded (also known as the equilibrium price)
market-clearing price
The price of your favorite soft drink just became lower. This means that you are likely to buy _________ of the drink.
more
At a product's lowest price, you would expect people to demand the ________ of that product.
most
At a price of $65, consumers demand 650 pairs of shoes, and sellers supply 650 pairs of shoes. At $65, there is _____. excess demand (demand is greater than supply) excess supply (supply is greater than demand) no excess supply or demand
no excess supply or demand
The cost of making a new skirt is $20. At a price of $15, consumers will demand 600 skirts, and producers will ________ skirts.
not supply
economy in which a central authority owns productive resources and distributes goods and services
planned economy
cost of a good or service
price
degree of excellence for something, such as a product
quality
amount
quantity
You produce clothing, and the price of cotton just increased by a lot. As a result, you will most likely _____ your prices. raise lower not change
raise
When Edison Electric Company and the Thomson-Houston Electric Company engaged in collusion, the two companies ___________ the level of competition in their industry.
reduced
prices of a good or service compared to the prices of another product
relative prices
People are demanding more apartments than sellers are willing to offer. This means that there is a _____ of apartments. surplus shortage minimum quantity
shortage
when buyers want to purchase more than the producers want to sell at the given price
shortage
ABC Software charges a price for its video games that maximizes its profits. This company most likely functions in a ___________ market.
single-seller
goods or services that can replace other goods or services
substitutes
The cost of producing a new watch is $50. At a price of $100, watches will most likely be _____ and _____. bought and purchased supplied and demanded made and produced
supplied and demanded
graph that shows the relationship between price and quantity supplied
supply curve
table that shows the relationship between price and quantity supplied
supply schedule
There are more jeans in the stores than consumers are willing to buy, at the given price. This means that there is a _____ of jeans. surplus shortage maximum quantity
surplus
when producers want to sell more than buyers want to purchase at the given price
surplus
Select all that apply. Select all the items that describe price. what a producer receives from selling a good what a consumer pays when buying a good the distribution method in a planned economy the distribution method in a market economy
what a producer receives from selling a good what a consumer pays when buying a good the distribution method in a market economy
You and a friend go clothes shopping and find a great pair of jeans. They fit you perfectly, but they also cost $100. You are willing to buy them, but you only have $50 in your wallet to spend on new clothes. Your friend likes the jeans and has the money to buy them. The jeans would count as a demand for _____. you, because you are willing to buy them and they fit you perfectly your friend, because he likes the jeans and has the money to buy them both of you, because you both like the jeans
your friend, because he likes the jeans and has the money to buy them