Chapter 1 Flashcards
_____________ looks at the economy as a whole, whereas ________________ studies the behavior of individual decision-making units.
Macroeconomics; Microeconomics
According to the law of demand, the quantity of a good demanded in a given time period:
Increases as its price falls, ceteris paribus.
An increase in the price of apples causes a(n) _______ for apples.
decrease in the quantity demanded
Ceteris paribus is an important assumption used in economics, and translates to:
Holding all else constant
Market supply and market demand curves are similar in that both:
Can be derived by adding horizontally all the curves of the individuals in the market.
Which of the following is a determinant of supply?
The prices of the factors of production.
A shift in supply is defined as a change in:
Supply because of a change in a non-price determinant.
The term market mechanism refers to:
The use of market prices and sales to determine resource allocation
When the current price is above the market-clearing level we would expect:
quantity supplied to exceed quantity demanded.
The demand of a good is D=119 -9.8P; the supply of it is S=9P -34. The market price is 5.7. Please find the amount of the shortage in the market.
D = Demand Multiplied by Price
S = Supply Multiplied by Price
Demand is GREATER than the Supply = D-S = Demand - Supply = Quantity Supplied
Solu = 45.84
The demand of a good is D=104 -3.3P; the supply of it is S=3P -24. Please find the equilibrium price.
Demand = Supply in this scenario. Find the E Price by adding the highest Demand and highest Supply and lowest and lowest, then divide the highest by the lowest.
Solu = 20.32/20.31
The demand of a good is D=104 -3.9P; the supply of it is S=3.9P -22. Please find the equilibrium quantity.
Find the E Price as before then solve for Demand by multiplying it by the E Price
Solu = 41
The demand of a good is D=115 -9.1P; the supply of it is S=8P -39. The market price is 10.6. Please find the amount of the surplus in the market.
Solve for Demand and Supply, then subtract the Supply by the Demand. Or
S-D = Surplus
Solu = 27.26
The quantity supplied of a good on a market is 25; its quantity demanded is 36. Please find the shortage on the market.
Qd - Qs = Shortage ( Quantity Demanded - Quantity Supplied = Shortage)
Solu = 11
The quantity supplied of a good on a market is 36; its quantity demanded is 22. Please find the surplus on the market.
Qs - Qd = Surplus (Quantity Supplied- Quantity Demanded = Surplus)
Solu = 14
The quantity demanded of a good is 25. There is a shortage of 4 units on the market. Please find the quantity supplied on the market.
Qd - Shortage units = Qs ( Quantity Demand - Shortage = Quantity Supplied)
Solu = 21
The quantity demanded of a good is 11. There is a surplus of 12 units on the market. Please find the quantity supplied on the market.
Qd + Surplus = Qs (Quantity Demanded + Surplus = Quantity Supplied)
If the equilibrium price has decreased, and the equilibrium quantity has increased in the market for toothpaste, what could have caused this?
When input price decreases, the supply increase, think of supply. In this case fluoride.
Which of the following is not held constant along a given supply curve for a good?
Price
Which of the following would advocate a laissez faire economic policy? (hint, scottish philosopher)
Adam Smith
Sometimes referred to as the Father of Economics, _____________________ wrote Wealth of Nations in 1776. (
Adam Smith
Karl Marx believed that the best use of resources would result from:
Government directives.
Assuming pizza is a normal good, if your income increases, then your demand for pizza will _______ and quantity demanded for pizza will _______.
increase; increase
When the price changes, if the percentage change in the quantity demanded is greater than the
percentage change in the price
The demand is elastic
