chap 3

Question 1

Profit = ?

Answer 1

Sales-Costs

Question 2

Factor Markets?

Answer 2

any place where factors of production like land, labor, and capital are exchanged

Question 3

Product Markets

Answer 3

any place where finished goods and services (product( are sold
- think grocery store or something online where you buy stuff

Question 4

Opportunity Costs

Answer 4

most desired goods or services that are forgoe in order to obtain something else

Question 5

What is a market?

Answer 5

simply refers to a place or situation where an exconomic exchange occurs (buyer and seller interact)

Question 6

what are the 4 factors of production?

Answer 6

land, labor, capital and entrepreneurship.

Question 7

Supply?

Answer 7

ability and willingness to sell (produce) specific quanitites of a good

Question 8

Demand?

Answer 8

ability and willingness to buy specific quantities of a good at alternative prices

• buy is on demand side
• a demand exists only if someone is willing and able to pay for the good

Question 9

Demand Schedule?

Answer 9

a table showing the quantities of a good a consumer is willing and able to buy at alternative prices in a given time period
- demand schedule tells us what the consuer is willing and able to buy not necessarily why

Question 10

Demand Curve

Answer 10

a convienent summary of buying intentions

- amount we buy of a good depends on its price

Question 11

Law of Demand?

Answer 11

as the price of a goods falls, people purchase more of it

Question 12

What are the 5 determinants of market demand?

Answer 12

tastes, income, other goods, expectations, and number of buyers

Question 13

What is TASTE determinant of market demand?

Answer 13

(desire for this and other goods)

Question 14

What is the INCOME determinant of market demand?

Answer 14

income (of the consumer)

Question 15

What is the OTHER GOODS determinant of market demand?

Answer 15

other goods (their avaliability and price)

Question 16

What is the EXPECTATIONS determinant of market demand?

Answer 16

expectations (for income, prices, tastes)

Question 17

What is the NUMBER OF BUYERS determinant of market demand?

Answer 17

how many people buy it

Question 18

complement good?

Answer 18

what happens to one good can cause change in demand of other good

- if you have milk with cereal and its price triples demand for cereal goe down 
- two goods that work together likes this is called complimentary good

Question 19

Substitute good?

Answer 19

price of cerel goes up, so demand for subsitite good goes up

- price of tea goes up, the demand for coffee goes up

Question 20

Ceteris Paribus?

Answer 20

assumption of nothing else changing

Question 21

What do demand curves show us?

Answer 21

how changes in market prices alter consumer behavior

Question 22

Shift in demand?

Answer 22

change in the quanitity demand at any given price

- entire demand curve shifts to the right when income goes up

Question 23

Explain movement vs shifts on a graph

Answer 23

movements along ademand curve are a response to price changes for that good

• shifts of the demand curve occur when the determinants of demand change
• when tasts, income, other goods, or expectations are altered, the basic relationship between price and quantity demand is changed (shfits)

Question 24

changes in quantity demanded

Answer 24

movements along a given demand curve in response to price changes of that good

Question 25

changes in demand

Answer 25

shifts of the demand curve due to changes in tastes, income, other goods, or expectations

Question 26

market demand

Answer 26

total quanitites of a goods or service people are willing and able to buy at alternative prices in a given time period

Question 27

market supply?

Answer 27

total quanitites of a good that sellers are willing and able to sell at alternative prices in a given time period, ceteris paribus

Question 28

what are the 6 determinants of market supply?

Answer 28

- technology - factor costs - other goods - taxes and subsidies - expectations - number of sellers

Question 29

Law of supply?

Answer 29

quanitity of a good supplied in a given time period increases as its price increases, ceteri paribus

Question 30

market supply is a what?

Answer 30

expression of seller’s intentions - an offer to sell- not a statement of actual sales

Question 31

changes in quantity supplied?

Answer 31

movements along a given supply curve

Question 32

changes in supply?

Answer 32

shifts of the supply curve

Question 33

explain difference between change in supply and quantity supplied?

Answer 33

changes in quanitity supplied can be tracked along the supply curve - change in supply are illustrated by shifts of the supply curve

Question 34

equilibrium price?

Answer 34

price at which the wuanitity of a good demanded in a given tie period equals the quantity supplied

Question 35

market mechanism?

Answer 35

use of market prices and sales to signal desired outputs (or resource allocations)

Question 36

Price floor?

Answer 36

minimum price for their services

Question 37

market surplus

Answer 37

amount by which the wuantity supplied exceeds the quantity demanded at a iven price

Question 38

market shortage

Answer 38

an excess quantity demanded over quanitity supplied

Question 39

when will there be a market shortage?

Answer 39

whenever the market price is set above or below the euqilibirum proce, either a market surplus or a market shortage will occur

Question 40

when will there be a market surplus?

Answer 40

when a market surplus, sellers will compete for customers by reducing prices