Introduction To Economics Ch. 3 (ECON 115)

If consumers view cappuccinos and lattés as substitutes, what would happen to the equilibrium price and quantity of lattés if the price of cappuccinos falls?

Price and quantity decrease.

Suppose you make jewelry. If the price of gold falls, then we would expect you to

be willing and able to produce more jewelry than before at each possible price.

Consider the market for portable air conditioners in equilibrium. When a heat wave strikes the equilibrium price

both price and quantity increase.

For a market for a good or service to exist, there must be a

buyers and sellers.

The Law of Demand states that, other things equal, when the price of a good

decreases, demand is high. increases, demand is low.

The market demand curve is

derived by summing horizontally the two individual demand curves for each possible price.

At the equilibrium price, the quantity of the good that buyers are willing and able to buy

exactly equals the quantity of the good that the sellers are willing and able to sell.

A decrease in the number of sellers in the market causes

supply of the good to decrease and a shift to the left.

Which of the following is NOT a determinant of the demand for a particular good? (Figure out which of these is not an explicit option on your test)

Determinants of the demand for a particular good: 1. Number of buyers 2. Tastes/preferences 3. Income 4. Expectations of future changes in prices, income, and availability of goods 5. Prices of related goods *4 ended up being the option that was misworded for me so that was my answer*

In a competitive market, the quantity of a product produced and the price of the product are determined by

all buyers and all sellers.

A decrease in the price of a good would...

increase the quantity demanded of the good and shift to the right

When a surplus exists in a market, sellers

lower price, which increases quantity demanded and decreases quantity supplied, until the surplus is eliminated.

The signals that guide the allocation of resources in a market economy are

prices.

The Law of Supply states that, other things equal, when the price of a good

rises, quantity supplied of the good rises.

Suppose roses are currently selling for $20 per dozen, but the equilibrium price of roses is $30 per dozen. We would expect a

shortage and price to go up.