Econ Chapter 3

Price and quantity supplied have a(n) ____ (one word) relationship.

direct

In free markets, though prices will rise and fall, ___ and___ will always be achieved

equilibrium price; equilibrium quantity

As with labor, plant and____used in the production of one good, can be used in the production of alternative goods.

equipment

If a decline in demand is greater than an increase in supply, the equilibrium quantity will_____.

fall

If the decline in supply is larger than the increase in demand, the equilibrium quantity will____.

fall

Other things equal, firms will produce and offer for sale___of their product at a high price than at a low price.

more

A change in demand occurs due to a change in the consumer's mind about purchasing a product that is based on something other than the____of the product

price

A change in quantity supplied is caused by an increase or decrease in the____of the produce under consideration and nothing else

price

The only factor that causes a movement along the supply curve is:

price

Which of the following has the greatest effect on the quantity supplied that producers are willing and able to supply?

price

Which of the following is the most important factor for a producer in determining how much of a product to produce?

price

The supply curve illustrates the relationship between:

price and quantity supplied

The market supply curve is the horizontal____of all the____supply curves for a good or service

summation; individual

Products whose demand varies directly with changes in money or income are called normal or ____goods

superior

Improvements in technology are a determinant of___

supply

Other things equal, the fundamental characteristic of the law of____ is that as the price falls, the quantity supplied of a product falls

supply

Producer expectations of future prices are a determinant of _____

supply

Substitution in production is a determinant of____

supply

The number of sellers or competitors in a market is a determinant or shifter of the ____curve

supply

___refers to the production of a product, whereas demand refers to the consumption of a product.

supply

A demand schedule illustrates the relationship between price and quantity in a ____format, whereas the demand curve is a ____representation.

tabular; graphical

Which of the following are determinants of supply?

taxes subsidies

A consumer's willingness to purchase in a market must be supported by the ability to make the purchase as evidence by

the necessary dollars

Which of the following are determinants of demand?

-Consumer expectations -number of buyers -prices of related goods -consumer tastes -changes in income

Which of the following does not shift the supply curve?

-The price of the product itself

Which of the following summarize the determinants of supply and their net effect on the supply curve?

-a change in the number of sellers will increase or decrease supply and cause the supply curve to shift to the right and left respectively -a change in resource prices will increase or decrease supply and cause the supply curve to shift to the right or left respectively

Which of the following are examples of a market?

-a local gas station -The new york stock exchange -craigslist -ebay

Which of the following would result in a change in supply?

-an increase or decrease in wages -an increase in the number of shoe stores at the local mall -an increase in the excise tax on cigarettes

Which of the following scenarios describe the appropriate effects on equilibrium price and quantity due to a decrease in supply while holding everything else constant?

-an oil spill causes several fisherman to leave the shrimp business and the equilibrium price of shrimp increases while quantity decreases -a fishing tax is placed on all shrimp and the equilibrium price of shrimp increases while quantity decreases

Which of the following type of goods affect the demand for another product due to a change their price?

-complementary goods -substitute good

Which of the following are reasons for the inverse relationship between price and quantity demanded?

-consumption is subject to diminishing marginal utility -a lower price increases the purchasing power of a buyers income, enabling a buyer to purchase more of a product -people ordinarily buy more of a product at a low price than at a high price -a higher price makes it more likely the consumer will substitute another good

Which of the following decrease demand for any good or service?

-falling incomes and the product is a normal good -an unfavorable change in consumer tastes -a decrease in the price of a substitute good

What are the ways that government can cope with a surplus?

-it can purchase the surplus of output -it can restrict supply or increase demand

Which of the following are determinants of demand?

-prices of related goods -consumer expectations -number of buyers -changes in income -consumer tastes

Government controlled prices cause

-surpluses -distortions in resource allocation -shortages -negative side effects

Choose all of the following that will cause a change in supply, not quantity supplied

-technology -producer expectations -number of sellers

Which of the following are determinants of supply?

-technology -resource prices -taxes and subsidies

for every good or service, the quantities demanded by individual consumers at every price are added together to compute the following

-the market demand curve for a good or service

Which of the following show the effects on equilibrium price and quantity due to an increase in demand, while holding everything else constant?

-the price of coke increases, therefore the equilibrium price and quantity of pepsi increase -consumers expect the price of shrimp to increase in the future, therefore, the equilibrium price and quantity increase now. -3-D television become popular, therefore the equilibrium price and quantity increase

Which of the following serve as potential complementary goods or services to your economics course?

-this learnsmart tutorial -a note taking device

Identify those statements that correctly state the effects on equilibrium price and quantity as a result of changes in supply and/or demand

-when the demand for health care rises while holding supply constant, the equilibrium price and quantity of health care will rise -when the supply and the demand for corn rises proportionally, the change in equilibrium price is indeterminate, but quantity will rise. -when the supply of DVD players falls while holding demand constant, the equilibrium price will rise and quantity will fall.

Which of the following illustrates the relationship between a good and its complement?

-when the price of lettuce increases; the demand for salad dressing decreases. -when the price of tuition decreases; the demand for textbooks increases

___in supply while holding demand constant results in an increase in equilibrium price, but a decrease in equilibrium quantity.

A decrease; a shift leftward

_____benefit is the additional utility gained from consuming one more unit of a good or service.

Marginal

Which are the following are substitutes?

Pepsi and Coca-Cola

Which of the following consists of a large number of independently acting buyers and sellers?

a competitive market

A decrease in demand while holding supply constant results in____in both equilibrium price and quantity.

a decline

An increase in business taxes causes___in supply and will ___production costs.

a decrease; increase

_____ in demand while holding supply constant___equilibrium price and _____equilibrium quantity.

a decrease; reduces; reduces

A price___is the maximum legal price a seller may charge for a product or service.

ceiling

An increase in equilibrium quantity and indeterminate change in equilibrium price is a result of which of the following?

a simultaneous and proportional increase in supply and demand

Which of the following refers to government financial assistance for the production of a good which lowers producers' costs and increases supply?

a subsidy

Which of the following refers to a particular apportionment or mix of goods and services most highly valued by society?

allocative efficiency

The effects on equilibrium price and quantity due to an increase in supply and a proportional and simultaneous increase in demand are shown by:

an increase in the equilibrium quantity and an indeterminate change in price

Product demand is likely to increase due to:

an increase in the number of buyers

The price of new cars and the sale of new cars represents:

an inverse relationship

the law of demand is consistent with common sense because people ordinarily

buy more at a low price

How do improvements in productive technology enable firms to produce more units of output?

by utilizing less resources and lowering costs

equilibrium price is otherwise known as market____price

clearing

The concept of demand can be summarized by a schedule or curve showing the quantity of a product that would be

consumed at various possible prices

One of the determinants of demand is___expectations

consumer

Marginal benefit equals marginal____at the intersection of the demand and supply curve

cost

An increase in supply and a simultaneous and proportional decrease in demand will result in a(n) _____in equilibrium price, with no effect on equilibrium quantity.

decrease

If an increase in supply is smaller than a decrease in demand, the equilibrium quantity will

decrease

If the price of hot dogs increases, the demand for hot dog buns will

decrease

An increase in supply while holding demand constant results in a(n)____in equilibrium price, but a(n)____in equilibrium quantity.

decrease; increase

A buyer's intentions or plans in regard to the purchase of a product is known as

demand

An increase in _____while holding supply constant results in an increase in both equilibrium price and quantity.

demand

The number of buyers is a determinant of market____.

demand

the law of____is illustrated by a downward-sloping curve

demand

A shortage results from an excess of quantity____

demanded

With a price ceiling, quantity____will exceed quantity___, resulting in a persistent shortage of product.

demanded; supplied

the____of supply are any factors other than the product's ____that have an effect on the supply of a good or service and cause the supply curve to shift.

determinants; price

In certain marktets, the_____sometimes concludes that supply and demand will produce prices that are unfairly high for buyers or unfairly low for sellers

government

At any price above the equilibrium price, such as with a price floor, quantity supplied will be ____the quantity demanded, resulting in a persistent excess supply or surplus of product.

greater than

Government may place legal limits on prices when it is determined that prices are unfairly____for buyers or unfairly___for sellers.

high; low

____resource prices raise production costs and, assuming a fixed product price,___profits.

higher; reduce

Quantity demanded is illustrated on the____axis, while price is illustrated on the____axis

horizontal (x); vertical (y)

Which pair exemplifies substitute goods?

hot dogs and hamburgers

A decrease in supply and proportional and simultaneous increase in demand will result in a(n)____in equilibrium price, with no effect on equilibrium quantity.

increase

When the price of Coke rises, the demand for Pepsi will likely___

increase

A decrease in supply while holding demand constant results in a(n)____in equilibrium price, but a(n)____in equilibrium quantity

increase; decrease

An increase in the sales, property, or any other tax will___production costs and____supply

increase; decrease

A favorable change in consumer tastes and preferences for a product will____demand, illustrated as a shift of the demand curve to the____.

increases; right

The vast majority of goods that are not related to one another are called____goods.

independent

Products that have decreased demand when consumer incomes rise and increased demand when consumer incomes fall are called____goods

inferior

The law of demand describes a(n)___relationship between the price of a good or service and the quantity demanded of that good or service

inverse

There is a(n)____relationship between the price of a good or service and the quantity demanded for that good or service

inverse

A demand curve shows the plotted:

inverse relationship between price and quantity demanded for a product

As firms leave an industry, supply decreases, illustrated as a shift of the supply curve to the___.

left

When a factor other than price affects consumption of a good or service, the demand curve can shift___or____.

left; right

If costs of production rise, the producer has an incentive to produce___output

less

due to the substation effect, buyers have an incentive to substitute:

less expensive products for similar products they have been buying but that are now more expensive

Diminishing marginal utility states that less satisfaction is derived from each successive unit of a product consumed. Therefore, as each successive unit yields____utility, consumers will buy additional units only if the price of those units is progressively____.

less; lower

The income effect is best described as___increasing the purchasing power of income, enabling consumers to purchase____of a product and vice versa.

lower prices; more

If the government subsidizes the production of a good, it in effect___the producers costs and___suppply

lowers; increase

The added cost of producing one more unit of output is called___cost.

marginal

The demand by a consumer for a good or service essentially reflects the____benefit of the good or service, based on the utility received.

marginal

Diminishing____states that, in any specific time period, buyers will derive less satisfaction from each additional unity of the product consumed

marginal utility

The determinants of demand for a product are factors or variables, other than the____ that affect consumption or buyers decision to purchase and consume.

price of the product

The interaction between buyers and sellers, which determines equilibrium___and___, is illustrated by the intersection of the demand and supply curves

price; quantity

The production of a good or service in the least costly way is known as____efficiency

productive

The interaction of buyers and sellers determines equilibrium price and equilibrium____

quantity

A change in____refers to a movement along the demand curve in response to changes in the price of a good or service, whereas a change in___refers to a shift of the demand curve leftward or rightward in response to anything other than changes in the price of a good or service

quantity demanded; demand

A simultaneous and proportional increase in supply and demand will result in a(n) ___ in equilibrium quantity, with no effect on equilibrium price.

rise

When the price of one product rises, the demand for the substitute will____

rise

in general, a rise in income causes a(n)____in demand for most products and a fall in income causes a(n)____in demand for most products, other things equal.

rise; fall

A normal good is an item for which demand____when income rises and____when income falls

rises; falls

A____the demand curve represents a change in demand while a____the demand curve represents a change in the quantity demanded.

shift of; movement along

A___the supply curve represents a change in supply while a____the supply curve represents a change in the quantity supplied

shift of; movement along

The goods and services produced by an economic unit through___can be exchanged for a full range of desired products produced by other economic units.

specialization

the income and____effects combine to make consumers willing and able to buy more of a product at a lower price than at a higher price.

substitution

why does a competitive market allocate society's resources efficiently to a particular product

to keep costs down