Eco 102-51 Macroeconomics Chapter 3

Andy views beer and pizza as complements to one another. If the price of pizza decreases, economists would expect:

Andy's demand for beer to increase.

Any given demand or supply curve is based on the ceteris paribus assumption that ___________________.

all else is held equal

The nature of demand indicates that as the price of a good increases:

buyers desire to purchase less of it.

Refer to Figure 3-3. A change from Point A to Point E represents a(n):

decrease in supply.

The demand curve for a typical good has a(n):

negative slope because some consumers switch to other goods as the price rises.

If new manufacturers enter the computer industry, then (ceteris paribus):

the supply curve shifts to the right.

A supply curve is a graphical illustration of the relationship between price, shown on the vertical axis, and ____________, shown on the horizontal axis.

quantity

According to the law of supply:

there is a direct relationship between price and quantity supplied

A severe freeze has once again damaged the Florida orange crop. The impact on the market for orange juice will be a leftward shift of:

the supply curve.

When quantity demanded decreases in response to a change in price:

there is a movement up along the demand curve.

But nearly all supply curves share a basic similarity: they slope _______________.

up from left to right

In economics, the demand for a good refers to the amount of the good that people:

will buy at various prices.

If an increase in the price of Good X causes a decrease in the demand for Good Y, we can conclude that:

Goods X and Y are complement goods.

A change in price of a good or service typically causes ___________________________ for that specific good or service.

a change along the supply curve

After widespread press reports about the dangers of contracting "mad cow disease" by consuming beef from Canada, the likely economic effect on the U.S. demand curve for beef from Canada is:

a shift of the demand curve for beef to the left (decrease in demand).

When __________________, a firm will supply a higher quantity at any given price for its output, and the supply curve will shift to the right.

costs of production fall

The downward slope of the demand curve again illustrates the pattern that as _____________ rises, _________________ decreases.

price, quantity demanded

A demand curve shows the relationship between price and _________________ on a graph.

quantity demanded

_________________ refers to the total number of units that are purchased at that price.

quantity demanded

When economists talk about supply, they are referring to a relationship between price received for each unit sold and the _________________.

quantity supplied

If a firm faces ________________________, while the prices for the output the firm produces remain unchanged, a firm's profits will increase.

lower costs of production

The ___________ is the only price where quantity demanded is equal to quantity supplied.

equilibrium price

The ____________ is the quantity where quantity demanded and quantity supplied are equal at a certain price.

equilibrium quantity

If the price is below the equilibrium level, then the quantity demanded will exceed the quantity supplied. This is known as ___________________

excess demand

Which of the following would reduce the supply of microcomputers?

higher wage rates for the workers that assemble the computers

Refer to Figure 3-3. A change from Point A to Point B represents a(n):

increase in quantity supplied.

Refer to Figure 3-3. A change from Point A to Point D represents a(n):

increase in supply.

The demand schedule for a good:

indicates the quantities that will be purchased at alternative market prices.

Economists refer to the relationship that a higher price leads to a lower quantity demanded as the _____________.

law of demand