Chap. 3

Question 1

Demand

Answer 1

Schedule/Curve of consumer willingness to buy at different prices.

Question 2

Price

Answer 2

Always Y Axis

Question 3

Law of Demand

Answer 3

Negative/Inverse relationship between price & quantity demanded

Question 4

Why is Demand Curve Downward?

Answer 4

D-I-S-CO

Question 5

D (Disco)

Answer 5

Diminishing Marginal Utility (Less satisfaction, the more u buy)

Question 6

I (Disco)

Answer 6

Income Effect (Lower Price, More income, People buy more)

Question 7

S (Disco)

Answer 7

Substitution Effect (Lower price, better deal, buy more)

Question 8

CO (Disco)

Answer 8

Common Sense (Observed behavior)

Question 9

Change in Quantity Demanded/Supplied

Answer 9

Movement

Question 10

Change in Demand/Supply

Answer 10

Shift

Question 11

What Changes Demand

Answer 11

BUY-TASTY-P-I-E

Question 12

BUY

Answer 12

Number of buyers

Question 13

TASTY

Answer 13

Tastes and Preferences

Question 14

P (BUY-TASTY-P-I-E)

Answer 14

Prices of Related Goods (Prices, Complementary, Substitute)

Question 15

I (BUY-TASTY-P-I-E)

Answer 15

Income Changes (Income, Normal, Inferior)

Question 16

E (BUY-TASTY-P-I-E)

Answer 16

Expectations (Optimistic, Pessimistic)

Question 17

Network Effect

Answer 17

value “Increases” as more people use it

Question 18

Congestion Effect

Answer 18

value “Decreases” as more people use it

Question 19

Complementary Goods

Answer 19

one good “Can” be used together with another good

Question 20

Substitute Goods

Answer 20

one good “Can Not” be used in place of another good

Question 21

Normal Goods

Answer 21

varies “Directly” with money (More income, more goods purchases)

Question 22

Inferior Goods

Answer 22

– varies “Indirectly” with money (More income, less goods purchases)

Question 23

Slope on of Demand Curve

Answer 23

Determines the position of the demand curve

Question 24

Supply

Answer 24

Schedule/Curve of the quantity of goods or services that producers are willing to sell at different prices

Question 25

Law of Supply

Answer 25

Positive/Direct relationship between price and quantity supplied

Question 26

Why Is The Supply Curve Upward

Answer 26

P-M-CO

Question 27

P (P-M-CO)

Answer 27

Profit Incentive (Higher price, More profit, Greater output)

Question 28

M (P-M-CO)

Answer 28

Marginal Cost Curve (Supply curve = Marginal Cost curve)

Question 29

CO (P-M-CO)

Answer 29

Common Sense (Observed Behavior

Question 30

What triggers a change in supply?

Answer 30

S-T-E-P R-T

Question 31

S (S-T-E-P R-T)

Answer 31

Number of Sellers

Question 32

T (S-T-E-P R-T)

Answer 32

Technology Changes

Question 33

E (S-T-E-P R-T)

Answer 33

Expectations

Question 34

P (S-T-E-P R-T)

Answer 34

Prices of Other Goods the Firm Could Produce (PO-C-S)

Question 35

R (S-T-E-P R-T)

Answer 35

Resources Prices (Input Costs)

Question 36

T (S-T-E-P R-T)

Answer 36

Taxes and Subsidies

Question 37

PO-C-S Meaning (Prices of Other Goods the Firm Could Produce)

Answer 37

PO - Prices of other goods
C - Production Complements
S - Production Substitutes

Question 38

Supply Curve Shifts to Right

Answer 38

Costs go up

Question 39

Supply Curve Shifts to Left

Answer 39

Costs go down

Question 40

Demand more than supply

Answer 40

Shortage

Question 41

Supply more than demand

Answer 41

Surplus

Question 42

Supply equals demand (best option)

Answer 42

Equilibrium price and quantity