chapter 3
14. if government increased everyones income tax rates to finance more generous benefits for seniors, the demand and supply model would predict a change in equilibrium price and quantity for some commodities because of
a change in the distribution of income with no change in average income
11. a movement along the supply curve could be caused by
a change in the price of a product
5. if goods A and B are complements an increase in the price of good A will lead to
a decrease in demand for good b
16. assuming a downwards sloping demand curve, an improvement in production technology is predicted to lead to
a decrease in equilibrium price and an increase in equilibrium quantity exchanged
a decrease in population causes
a leftward on the the damand curve
fall in income causes
a leftward on the the damand curve
the anticipation of a future price that will decrease the price causes
a leftward on the the damand curve
a rise in the price of a compliment causes
a leftward shift on the the damand curve
fall in the price of a substitute causes
a leftward shift on the the damand curve
a change in taste that disfavors the product causes
a leftward shift on the the demand curve
2. an increase in quantity demand refers too
a movement down along a demand curve
a change in taste that favors that product causes
a rightward shift on demand curve
a fall in the price of a compliment causes
a rightward shift on demand curve
a rise in income causes
a rightward shift on demand curve
a rise in the price of a substitute causes
a rightward shift on demand curve
an increase in population causes
a rightward shift on demand curve
the anticipation of a future event that will increase the price causes
a rightward shift on demand curve
A ______ in price causes a movement ______ and to the _____ along the demand curve, hence quantity demand will fall
a rise in price, upwards and to the left meaning quantity demand will fall
the difference between a shift in the demand curve and a movement along the demand curve
a) A shift is caused by a change is demand b) movement along the demand curve is caused by a change in quantity demand c) a change in quanitity demand can be caused by a shift in the demand curve
How can a rightward shift can be caused on the demand curve, Give 6 examples
a) a rise in income b) a rise in the price of a substitute c) a fall in the price of a compliment d) a change in taste that favors that product e) an increase in population f) the anticipation of a future event that will increase the price
How can a leftward shift can be caused on the demand curve. GIve 5 examples
a) fall in income b) fall in the price of a substitute c) a rise in the price of a compliment d) a change in taste that disfavors the product e) a decrease in population f) the anticipation of a future price that will decrease the price
When there is a leftward shift is the demand curve
a) less desired at each price b) each price corresponds to a lower quantity than it did b4
when there is a right shift in the demand demand curve
a) more is desired at each price b) each price corresponds to a high quantity than it did before
the supply curve represents ...
a) the relationship between quantity supplied and the price b) its positive slope indicates that quantity supplied increases when price increases
How do substitutes in consumption effect the demand curve)
goods that can be used in place of another good to satisfy similar needs - the rise of one price will increase the quantity demand for the other product
How do complements in consumption effect the demand curve
goods that tend to be consumed together - the fall of one price will increase the demand for both products
How does customers income effect the demand curve
if average income rises customers can be expected to desire more of most goods
6. Increased public awareness of the adverse health effects of smoking
is characterized as a change in tasts that leads to a leftwars shift in the demand curve for ciggarets
17. comparative statics
is the analysis of market equilibria under different set of conditions
18. when price exceeds its equilibrium value, the quantity bought and sold
is the quanity demanded
the price of the product and the quantity supplied are related ______ because ...
positively because the high the products own price, the more its producers will supply and the the lower the price the less producers will supply
How does customers income effect the demand curve with inferior goods
quantity demand decreases when income levels rise
How does customers income effect the demand curve with normal goods
quantity demand increases when income levels rise
quantity demand is
quantity demanded at a single point
How does an increase in population demand effect the demand curve
rise for all goods (right shift)
change in supply means a
shift of the whole supply curve
government taxes or subsidies are
special taxes levied on the production of special good such as gasoline cigarets and alcohol
9. a rightward shift in the supply curve indicates
that at each price quanitity supplied has increased
quantity supplied is
the amount of a commodity that producers want to sell during some time period
comparative statistics
the derivation of predictions by analyzing the effects of a change in some exogenous variable on the equilibrium
supply is
the entire relationship between the quantity of some commodity that producer wishes to sell and the price of that commodity
13. excess demand exists whenever
the equilibrium price is above the existing price
what happens to the equilibrium price with an increase in supply
the equilibrium price moves down the demand curve and becomes lower - because an increase in supply means a rightward shift
what happens to the equilibrium price with a decrease in supply
the equilibrium price moves up the demand curve and becomes higher - because an decrease in supply means a leftward shift
change in quantity supplied means
the movement from one point on a supply curve to another point
the number of suppliers are the
the number of firms producing that product and offering it for sale
An increase in demand means that the demand curve shifts to the _______, and hence quantity demanded will be ______ at each price
to the right, with higher quantity demand
excess demand means
upward pressure on price
what happens to the equilibrium price with a decrease in demand
- the equilibrium price moves down the supply curve and becomes lower - because an increase in demand means a leftward shift
what happens to the equilibrium price with an increase in demand
- the equilibrium price moves up the supply curve and becomes higher - because an increase in demand means a rightward shift
prices of inputs are
all things that a firm uses to produce its outputs, such as materials, labour and machines
8. a shift in supply curve will not be caused by
an increase in average customer income
15. an increase in both equilibrium price and quanitity exchange is consistant with
an increase in demand
7. in economics the term inferior goods means that
an increase in income shifts its demand cure inwards to the left
12. when two goods are compliments in production
an increase in the price of one will increase the supply of the other
4. an increase in demand means that
at each price, consumers desire a greater quantity
10. an increase in the price of an input will
b) decraese quantity supplied at each price c) DEACREASE SUPPLY d) cause the supply curve to shift to the left
19. a change is money price of the product, other things consistant is
c) a change in both its relative price and absolute price d) a change in its opportunity cost
shifts in the demand curve are
caused by a change in any variable previously held constant
technology can be described as
change in knowlege or change in weather conditions
prices of other products (suppy)
changes in one effect the other depending on wheather they are substiutes or sompliments
How does a decrease in in population demand will effect demand curve
decrease for all goods (left shift)
for a normal good a decrease in consumer income will result in the
demand curve shifting to the left
excess supply means
downward pressure on price
3. the demand curve and the demand scedual
each reflect a relationship beween quanitity demanded and price, other things equal
the demand curve can be described as the
entire relationship between quantity demand and price, other things being equal