ECON 1113 LS 3 HW 3A HW 3B and HW 3C
The characteristics of a competitive market include:
1) Full information 2) No transaction costs 3) Price-taker 4) A standardized good
Even though perfectly competitive markets are rare, studying them helps us understand
1) other, less competitive types of markets 2) markets that are lose to perfectly competitive
A change in quantity supplied is due to a change in ____. A change in supply is due to a change in ____.
1) price 2) non-price determinants of supply
When supply and demand move in the opposite direction, we can predict the direction of the change in ____ but not the direction of the change in ____.
1) price 2) quantity
The nonprice determinants of supply that shift supply include
1) prices of inputs 2) number of sellers 3) technology 4) prices of related goods 5) producer expectations
The demand curve will shift when
1) the benefit consumers expect to receive from a good increases. 2) The consumers' opportunity costs of buying the good decreases.
On the demand curve, quantity goes on the ____ axis and price on the ____ axis.
1) x 2) y
A market economy is:
Organized by private decision-making individuals.
The quantity demanded is
a point on the demand curve
Environmentalists launch a successful One Family, One Car campaign:
Consumer preferences
Event: Demand decreases; supply decreases.
Equilibrium price: Equilibrium quantity:
Event: Demand decreases; supply increases.
Equilibrium price: Equilibrium quantity:
Event: Demand decreases; supply remains constant.
Equilibrium price: Equilibrium quantity:
Event: Demand increases; supply decreases.
Equilibrium price: Equilibrium quantity:
Event: Demand increases; supply increases.
Equilibrium price: Equilibrium quantity:
Event: Demand increases; supply remains constant.
Equilibrium price: Equilibrium quantity:
Event: Supply decreases; demand remains constant.
Equilibrium price: Equilibrium quantity:
Event: Supply increases; demand remains constant.
Equilibrium price: Equilibrium quantity:
The government announces a massive plan to bail out the auto industry and subsidize production costs.
Expectations
The government announces a plan to offer tax rebates for the purchase of commuter rail tickets.
Expectations
All of the farmers have their prices posted prominently in front of their stalls.
Full information
Layoffs increase as the economy sheds millions of jobs:
Incomes
A global recession reduces the incomes of consumers in poor countries, who rely on corn as a staple food (assuming corn is a normal good):
Leftward shift of demand.
A drought hits corn-growing regions:
Leftward shift of supply.
____ allow for constant communication between buyers and producers, using prices as a signal.
Markets
A drought hits corn-growing regions:
Movement along the demand curve.
A new hybrid variety of corn seed causes a 15 percent increase in the yield of corn per acre:
Movement along the demand curve.
A global recession reduces the incomes of consumers in poor countries, who rely on corn as a staple food (assuming corn is a normal good):
Movement along the supply curve.
An advertising campaign by the beef producers' association highlights the health benefits of corn-fed beef:
Movement along the supply curve.
The government announces a subsidy for biofuels made from corn:
Movement along the supply curve.
There is no difficulty moving around between stalls as you shop and choosing between farmers.
No transaction costs.
A baby boom occurred 16 years ago:
Number of buyers
Factories close because of an economic downturn.
Number of sellers.
Cucumbers are the same price at each stall.
Participants are price takers.
A steel tariff increases the price of steel.
Prices of inputs.
An oil shortage causes the price of gasoline to soar:
Prices of related goods.
The government offers tax rebates in return for the purchase of commuter rail tickets:
Prices of related goods.
The price of trucks falls, so factories produce more cars.
Prices of related goods.
An advertising campaign by the beef producers' association highlights the health benefits of corn-fed beef:
Rightward shift of demand.
The government announces a subsidy for biofuels made from corn:
Rightward shift of demand.
A new hybrid variety of corn seed causes a 15 percent increase in the yield of corn per acre:
Rightward shift of supply.
You and the other customers all seem indifferent about which cucumbers to buy.
Standardized good.
Improvements in robotics increase efficiency and reduce costs.
Technology.
The government announces that it will dramatically rewrite efficiency standards, making it much harder for automakers to produce their cars.
Technology.
A demand curve is
a curve showing the price-quantity combinations of the demand schedule
A decrease in quantity demanded refers to
a leftward movement along the demand curve
When income increases and demand shifts right, the good is
a normal good
Non-price determinants affect the quantity demanded at ____ price.
each
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.
The trade-off involved in production looks more favorable when the benefit of production
increases relative to the opportunity cost.
In a competitive market, you have full ____ about the price and features of the good being bought and sold.
information
According to the law of demand, price and quantity are ____ related.
inversely
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, we get overall ____ demand.
market
The price at which every seller finds a buyer is sometimes called the ____ price.
market-clearing
The price of related goods determines supply because it affects the
opportunity cost of production
The law of supply says that
quantity supplied increases as price increases.
According to the law of demand, when all else is held equal, quantity demanded ____ as price falls.
rises
A supply ____ is a table that shows the quantities of a particular good or service that producers will supply at various prices.
schedule
At any price above or below the equilibrium price
sellers face an incentive to raise or lower prices.
When one of the five nonprice determinants of supply changes, the supply curve
shifts
If the demand curve shifts, it must be the case that
something other than the price changed.
A ____ good is a good for which any two units have the same features and are interchangeable.
standardized
All else equal, if the demand for good B increases when the price of good A increases, the two goods are ____.
substitutes
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
A graph showing the price-quantity combinations from the supply schedule is a ____ curve.
supply
When no buyer or seller can affect the market price, the buyer or seller is called a price ____.
taker
When the market price goes up and all other factors remain constant,
the benefit of production increases relative to the opportunity cost.
When the price of something falls,
the benefit that you get is unchanged, but the opportunity cost falls.
In economics, the term market refers to
the buyers and sellers themselves
The market equilibrium is the point where
the demand curve intersects the supply curve.
Economists frequently use ceteris paribus in their analysis of the economy because
the impact of a change on a single variable is easier to predict
When there are no transaction costs,
you don't have to pay anything for the privilege of buying or selling in the market.
'Ceteris paribus' means
all other things are assumed to be the same
If rising incomes cause the demand for beer to decrease, beer is ____.
an inferior good
If a decrease in the price of laptops causes the demand for tablets to increase, laptops and tablets are ____.
complements
Related goods that are consumed together are called ____.
compliments
The personal likes and dislikes that make buyers more or less inclined to purchase a good are
consumer preferences
A demand schedule shows the quantities of a particular good or service that ____ are willing and able to purchase at various prices.
consumers
If research shows that almonds reduce the occurrence of cancer,
demand for almonds will shift right
For a normal good, increases in income will cause
demand to increase
Consumer preferences and the expectations of future prices are considered non-price ____ of demand
determinants
