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Microeconomics > Chapter 2 Demand And Supply > Flashcards

Chapter 2 Demand And Supply Flashcards

1
Q

Demand Schedule

A

a table showing the various quantities demanded per period of time at different prices.

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2
Q

ceteris paribus

A

other things being equal, or other things remaining the same

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3
Q

Demand

A

the quantities that consumers are willing and able to buy per period of time at various prices.

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4
Q

inverse relationship between price and quantity

A

The higher the price, the lower will be the quantity demanded, and the lower the price, the higher will be the quantity demanded.

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5
Q

change in the quantity demanded

A

the change in quantity that results from a price change. It is illustrated by a movement along a demand curve.

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6
Q

real income

A

income measured in terms of the amount of goods and services that it will buy. It will increase if either actual income increases or prices fall.

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7
Q

income effect

A

the effect that a price change has on real income and therefore on the quantity demanded of a product.

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8
Q

substitution effect

A

the substitution of one product for another as a result of a change in their relative prices.

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9
Q

substitution effect

A

the substitution of one product for another as a result of a change in their relative prices.

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10
Q

The “other-things-being-equal” assumption is important to the law of demand because ______.

A

factors other than the price of the product affect the amount of a product purchased

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11
Q

______ shows the quantities of a product that will be purchased at various possible prices, other things being equal.

A

The demand curve

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12
Q

A demand ________organizes the relationship between price and quantity in a tabular format, whereas the demand ________ is a graphical representation of this relationship. (Enter only one word per blank.)

A

Schedule

Curve

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13
Q

Other things being equal, the amount of a product that will be purchased at various possible prices is shown by ______.

A

Demand

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14
Q

The inverse relationship between price and quantity demanded can be graphically illustrated by ______.

A

a downward sloping curve

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15
Q

A consumer’s willingness to purchase in a market must be supported by the ability to make the purchase as evidenced by ______.

A

the necessary income

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16
Q

An inverse relationship between two variables shows a(n) _______ relationship.

A

Negative

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17
Q

According to the income effect, what would happen if the price of laptop computers decreased?

A

Consumers would have more money to spend on tablets.

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18
Q

According to the substitution effect, what would happen if the price of strawberries increased?

A

Consumers would buy less strawberries and purchase other fruit that are comparably less expensive

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19
Q

__________ is the single most important factor in determining what and how much of a good will be purchased. (Enter one word in the blank.)

A

Price

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20
Q

What is the term used to describe the inverse or negative relationship between price and quantity?

A

The law of demand.

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21
Q

For every good or service, the quantities demanded by individual consumers at every price are added together to compute which of the following?

A

The market demand curve for a good or service.

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22
Q

Demand schedule tells us

A

What people MIGHT buy, not what they are actually buying.

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23
Q

What is one of the reasons for the inverse relationship between price and quantity demanded?

A

The income effect.

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24
Q

When the price of a good increases relative to other goods and the consumer subsequently buys less of this good, what is this referred to?

A

The substitution effect.

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25
Q

In his book The Wealth of Nations, what did Adam Smith suggest was the primary motivation of both consumers and producers?

A

Self interest

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26
Q

Supply refers to:

A

The quantity a company is willing and able to produce at different prices.

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27
Q

The market demand curve is the ______ of all individual demand curves for a good or service.

A

summation

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28
Q

supply schedule

A

a table showing the various quantities supplied per period of time at different prices.

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29
Q

True or false: According to the law of supply, price and quantity supplied are directly related.

A

True

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30
Q

What is the primary motive for producers?

A

What is the primary motive for producers?

31
Q

The supply curve illustrates the relationship between what two things?

A

Price and quantity supplied.

32
Q

Which curve shows the seller’s minimum acceptable price for each unit of the product?

A

Supply

33
Q

True or false: The market demand curve is derived by summing up the producers’ individual demand curves for a good or service.

A

False

34
Q

The supply curve is ______ sloping curve.

A

an upward

35
Q

Which of the following represents ‘a change in supply’?

A

A change in the supply schedule and a shift of the curve.

36
Q

A change in supply is represented by a ______ the supply curve while a change in quantity supplied is represented by a _______ the supply curve.

A

shift of; movement along

37
Q

Market (one word) ________is a schedule or curve showing the various amounts of a product that producers are willing and able to make available for sale at each possible price during a specific period.

A

supply or supplied

38
Q

The only factor that causes a movement along the supply curve is:

A

Price

39
Q

Other things equal, the fundamental characteristic of the law of (one word)______ is that as the price falls, the quantity supplied of a product falls.

A

Supply

40
Q

True or false: We obtain the market supply curve by “vertically adding” the supply curves of the individual producers.

A

False

41
Q

Choose all of the following that will cause a change in supply rather than a change in quantity supplied.

A

Producer expectations
Technology
Number of sellers

42
Q

A ______ the supply curve represents a change in supply while a ______ the supply curve represents a change in the quantity supplied.

A

shift of; movement along

43
Q

A change in ______ causes a movement along the supply curve.

A

product price

44
Q

To obtain the market supply, we would add up the individual supply of all the companies producing a certain product.

A

True

45
Q

The market supply curve is the horizontal ______ of all the ______ supply curves for a good or service.

A

summation; individual

46
Q

A ________ is an institution or mechanism that brings buyers and sellers into contact

A

Market

47
Q

What determines market price and equilibrium output in a market?

A

The interaction of buyers and sellers

48
Q

Why will a higher price will increase the quantity supplied of a product?

A

Higher prices will increase the suppliers profits

49
Q

A shortage results from an excess of quantity______

A

Demanded

50
Q

A surplus is also known as an excess of ______.

A

quantity supplied

51
Q

What will happen to the price of a good when firms cannot sell all of the quantity?

A

The price will decrease.

52
Q

The interaction between buyers and sellers determines the equilibrium price and the _________ quantity.

A

Equilibrium

53
Q

During natural disasters there often ends up being shortages of various goods such as water. What will happen to the price when the quantity demanded exceeds quantity supplied?

A

It will increase

54
Q

The determinants of demand for a product are factors or variables, other than the ______, that affect consumption or buyers’ decisions to purchase and consume.

A

Price of the product

55
Q

The demand curve can shift ____, or ______

when a factor other than price affects consumption of a good or service.

A

Blank 1: rightward, right, outward, out, upward, or up

Blank 2: leftward, left, inward, in, down, or downward

56
Q

A decrease in demand while holding supply constant results in ______.

A

a decrease in both equilibrium price and quantity

57
Q

The demand for a normal product falls because of ______.

A

a fall in income

58
Q

True or false: Changes in the determinants of demand will cause a movement along the demand curve.

A

False

59
Q

Products that have decreased demand when consumer incomes rise and increased demand when consumer incomes fall are called ______ products.

A

Inferior

60
Q

Which of the following type of products affect the demand for another product due to a change in their price?

A

Substitute goods

Complementary goods

61
Q

When the price of a product falls, demand for its substitute will ______.

A

Decrease

62
Q

The price of ______ products is a determinant of demand.

A

Related

63
Q

If the price of a product is expected to increase in the future, demand for that product will ______ today. If the price is expected to decrease in the future, demand will ______ today.

A

rise; fall

64
Q

Macaroni and cheese is considered to be an inferior product. What will happen to the equilibrium price and quantity if there is a decrease in the income of the consumers?

A

Price will increase and quantity will increase.

65
Q

Which of the following correctly states the effects on equilibrium price and quantity due to an increase in demand, while holding everything else constant?

A

3-D televisions become popular and the equilibrium price and quantity of 3-D televisions increase

66
Q

Hank owns a farm and sells potatoes in a perfectly competitive market. What action might he take if demand falls and he is making economic losses in the short run?

A

Cut production

67
Q

Many cooks view butter and margarine to be substitutes. If the price of butter decreases, how will the market for margarine be affected?

A

Price will decrease and quantity demanded will decrease.

68
Q

If producers are willing to produce more goods at each and every price, how is this represented on a demand and supply diagram?

A

Supply will shift to the right.

69
Q

Which of the following correctly state the effects on equilibrium price and quantity due to an increase in demand?

A

Consumers expect the price of shrimps to increase in the future, therefore the equilibrium price and quantity increase now.

The price of Coke increases, therefore the equilibrium price and quantity of Pepsi increase.

3-D televisions become popular, therefore the equilibrium price and quantity increase.

70
Q

The determinants of supply for a product are factors or variables, other than the ______, that affect the sellers decisions to sell.

A

price of the product

71
Q

How will an increase in the wages of people working in oil refineries effect the market for oil?

A

It will shift supply left.

72
Q

The ______ incurred by firms when producing a product arise from the prices of the factor inputs that are used to produce it.

A

costs of production

73
Q

The determinant of supply dealing with alternative products that can be produced by firms is called ______.

A

price of substitutes in production

Microeconomics (10 decks)

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