Econ Chapter 4
If the economy goes into a recession and incomes fall, what happens in the markets for inferior goods?
Prices and quantities both rise.
Quantity Demanded
The amount of a good that buyers are willing and able to purchase
Quantity Supplied
The amount of a good that sellers are willing and able to sell
Law of Supply and Demand
The claim that the price of any good adjusts to bring the quantity supplied and the quantity demanded for that good into balance
Law of Demand
The claim that, other things being equal, the quantity demanded of a good falls when the price of the good rises
Law of Supply
The claim that, other things being equal, the quantity of a good rises when the price of the good rises
Movie tickets and film streaming services are substitutes. If the price of film streaming increases, what happens in the market for movie tickets?
The demand curve shifts to the right.
A change in which of the following will NOT shift the demand curve for hamburgers?
The price of hamburgers.
Equilibrium Price
The price that balances quantity supplied and quantity demanded
Equilibrium Quantity
The quantity supplied and the quantity demanded at the equilibrium price
Complements
Two goods for which an increase in the price of one leads to a decrease in the demand for the other
Substitutes
Two goods for which an increase in the price of one leads to an increase in the demand for the other
Which of the following shifts the supply curve for pizza to the right?
a decrease in the price of cheese, an input to pizza.
The best definition of a market is...
a group of buyers and sellers of a good or service.
Which of the following might lead to an increase in the equilibrium price of jelly and a decrease in the equilibrium quantity of jelly sold?
an increase in the price of grapes, an input into jelly.
Which of the following will shift the demand curve for pizza to the right?
an increase in the price of hamburgers, a substitute for pizza.
Which of the following moves the pizza market up along a given supply curve?
an increase in the price of pizza.
An increase in ________ will cause a movement along a given supply curve, which is called a change in ________.
demand, quantity supplied.
The market for which product best fits the definition of a perfectly competitive market?
eggs.
In a perfectly competitive market,...
every seller takes the price of its product as set by market conditions.
If pasta is an inferior good, then the demand curve shifts to the ________ when ________ rises.
left, consumers' income.
The discovery of a large new reserve of crude oil will shift the ________ curve for gasoline, leading to a ________ equilibrium price.
supply, lower.
Normal Good
A good for which an increase in income raises the quantity demanded
Inferior Good
A good for which, other things being equal, an increase in income leads to a decrease in demand
Demand Curve
A graph of the relationship between the price of a good and the quantity demanded
Supply Curve
A graph of the relationship between the price of a good and the quantity supplied
Market
A group of buyers and sellers of a particular good or service
Competitive Market
A market in which there are many buyers and many sellers so that each has a negligible impact on the market price
Shortage
A situation in which quantity demanded is greater than quantity supplied
Surplus
A situation in which quantity supplied is greater than quantity demanded
Equilibrium
A situation in which the market price has reached the level at which quantity supplied equals quantity demanded
Demand Schedule
A table that shows the relationship between the price of a good and the quantity demanded
Supply Schedule
A table that shows the relationship between the price of a good and the quantity supplied
