Econ

Consumer surplus is defined as the difference between the total amount consumers would be willing and able to pay for that quantity and the total amount they actually do pay.

True

If both demand and supply increase, the equilibrium quantity will always increase.

True

If both the demand and supply curves of chocolate shift to the left, the equilibrium quantity will decrease.

True

If both the demand and supply curves shift to the left, but the demand curve shifts more than the supply curve, the equilibrium price will decrease.

True

If both the supply and demand curves shift rightward, but the supply curve shifts more than the demand curve, equilibrium price will decrease.

True

Market exchange usually benefits both consumers and producers.

True

Prices help both producers and consumers recognize what's happening in the market and make choices based on this information.

True

Producing at the lowest possible cost per unit is no guarantee that firms are producing what consumers most prefer.

True

The demand and supply curves intersect at the equilibrium point.

True

If the equilibrium price for a gallon of paint is $20 and the equilibrium quantity is 7 million, what is the market-clearing price for a gallon of paint?

$20

A market finds equilibrium through the independent and voluntary actions of a small amount of buyers and sellers.

False

A price floor must be set below the equilibrium price to be effective.

False

A surplus takes any pressure off the market that might cause the price of a good to change.

False

Achieving productive efficiency guarantees success in the market.

False

Changes in technology usually have no effect on any given supply curve.

False

Disequilibrium is a permanent condition.

False

If the demand and supply curves shift in opposite directions, equilibrium quantity will always increase.

False

If the government was concerned about affordable housing, it might enact a price floor.

False

It has been shown that charging people on Medicaid a small amount of money for visits to the doctor has no effect on their number of visits.

False

Once an equilibrium price is reached, it will no longer change in the future.

False

Only consumers benefit from the market, not producers.

False

Technological breakthroughs can shift a demand curve but not a supply curve.

False

The leftward shift of a given supply curve reduces price and increases quantity.

False

While the demand curve for a sports magazine shifts rightward, the supply curve also moves rightward but to a greater degree. This would cause equilibrium price to

decrease.

Suppose the supply and demand curves for cameras shift leftward. As a result, equilibrium quantity

decreases.

Which of the following situations would not shift the demand curve for dental floss?

no new buyers or sellers enter the market and sales stay the same.

Which of the following parties doesn't drive a market?

non consumers

A maximum legal price above which a product cannot be sold

price ceiling

A minimum legal price below which a product cannot be sold

price floor

A situation achieved when a firm produces output at the lowest possible cost per unit

productive efficiency

If a company that produces high-end pajamas supplies 5 million pairs but consumers demand 2 million pairs of pajamas, which of the following describes the result of this situation?

surplus of pajamas

What will happen to the price of a good when there is a shortage of that good?

The price increases.

If the price of vitamins decreases while the quantity demanded increases, how would this be reflected in the supply curve?

The supply curve would not be affected.

A decrease in the price of ketchup could affect the demand for French fries.

True

A shortage results when the quantity demanded exceeds the quantity supplied.

True

Adam Smith described the "invisible hand" of market competition.

True

An equilibrium price is achieved when quantity supplied is equal to quantity demanded.

True

An increase in the number of shops that sell coats in one mall could shift the supply curve for coats.

True

All human creation used to produce goods and services

Capital goods

Both the demand curve and the supply curve for pencils shift rightward. How is the price of pencils affected?

It cannot be determined from the information given.

An automobile plant employs most of the people in a town. The plant suddenly shuts down production. What effects might a local burger joint feel as a result?

The demand curve for burgers would shift leftward.

A situation achieved when a firm produces output most valued by consumers

allocative efficiency,

An approach that borrows insights from psychology to help explain economic choices

behavioral economics

The idea that there are limits on the amount of information that people can comprehend and act on

bounded rationality

The quantity of a product demanded is not equal to the quantity supplied

disequilibrium

Limited self-discipline in following through with decisions in your self-interest, especially your long-term interest, is

limited willpower.

Quantity demanded equals quantity supplied and the market clears

market equilibrium

The amount by which the quantity demanded exceeds the quantity supplied at a particular price

shortage

A firm that produces lightweight glasses frames supplies 10 million frames. However, consumers demand 11 million frames. Which of the following statements describes the result of this situation?

shortage of frames.

The amount of a product that remains unsold at a given price

surplus

The cost of time and information needed to carry out market exchange

transaction costs