Chapter 3

Question 1

ceteris paribus

Answer 1

other things being equal

Question 2

complements

Answer 2

goods that are often used together so that consumption of one good tends to enhance consumption of the other

Question 3

consumer surplus

Answer 3

the extra benefit consumers receive from buying a good or service, measured by what the individuals would have been willing to pay minus the amount they actually paid

Question 4

deadweight loss

Answer 4

the loss in social surplus that occurs when a market produces an inefficient quantity

Question 5

demand

Answer 5

the relationship between price and the quantity demanded of a certain good or service

Question 6

demand curve

Answer 6

a graphic representation of the relationship between price and quantity demanded or a certain good or service, with quantity on the horizontal axis and the price on the vertical axis

Question 7

demand schedule

Answer 7

a table that shows a range of prices for a certain good or service and the quantity demanded at each price

Question 8

economic surplus

Answer 8

(same as social surplus) the sum of consumer surplus and producer surplus

Question 9

equilibrium

Answer 9

the situation where quantity demanded is equal to the quantity supplied; the combination of price and quantity where there is no economic pressure from surpluses or shortages that would cause price or quantity to change

Question 10

equilibrium price

Answer 10

the price where quantity demanded is equal to quantity supplied

Question 11

equilibrium quantity

Answer 11

the quantity at which quantity demanded and quantity supplied are equal for a certain price level

Question 12

excess demand

Answer 12

(same as shortage) at the existing price, the quantity demanded exceeds the quantity supplied

Question 13

excess supply

Answer 13

(same as surplus) at the existing price, quantity supplied exceeds the quantity demanded

Question 14

factors of production

Answer 14

(same as inputs) the resources such as labor, materials, and machinery that are used to produce goods and services

Question 15

inferior good

Answer 15

a good in which the quantity demanded falls as income rises, and in which quantity demanded rises and income falls

Question 16

inputs

Answer 16

(same as factors of production) the resources such as labor, materials, and machinery that are used to produce goods and services

Question 17

law of demand

Answer 17

the common relationship that a higher price leads to a lower quantity demanded of a certain good or service and a lower price leads to a higher quantity demanded, while all other variables are held constant

Question 18

law of supply

Answer 18

the common relationship that a higher price leads to a lower quantity demanded of a certain good or service and a lower price leads to a higher quantity demanded, while all other variables are held constant

Question 19

normal good

Answer 19

a good in which the quantity demanded rises as income rises, and in which quantity demanded falls as income falls

Question 20

price

Answer 20

what a buyer pays for a unit of the specific good or service

Question 21

price ceiling

Answer 21

a legal maximum price

Question 22

price control

Answer 22

government laws to regulate prices instead of letting market forces determine prices

Question 23

price floor

Answer 23

a legal minimum price

Question 24

producer surplus

Answer 24

the extra benefit producers receive from selling a good or service, measured by the price the producer actually received minus the price the producer would have been willing to accept

Question 25

quantity demanded

Answer 25

the total number of units of a good or service consumers are willing to purchase at a given price

Question 26

quantity supplied

Answer 26

the total number of units of a good or service producers are willing to sell at a given price

Question 27

shift in demand

Answer 27

when a change in some economic factor (other than price) causes a different quantity to be demanded at every price

Question 28

shift in supply

Answer 28

when a change in some economic factor (other than price) causes a different quantity to be supplied at every price

Question 29

shortage

Answer 29

(same as excess demand) at the existing price, the quantity demanded, exceeds the quantity supplied; also called excess demand

Question 30

social surplus

Answer 30

(same as economic surplus and total surplus) the sum of consumer surplus and producer surplus

Question 31

substitute

Answer 31

a good that can replace another to some extent, so that greater consumption of one good can mean less of the other

Question 32

supply

Answer 32

the relationship between the price and quantity supplied of a certain good or service

Question 33

supply curve

Answer 33

a line that shows the relationship between price and quantity supplied on a graph, with quantity supplied on the horizontal axis and price on the vertical axis

Question 34

supply schedule

Answer 34

a table that shows a range of prices for a good or service and the quantity supplied at each price

Question 35

surplus

Answer 35

(same as excess supply) at the existing price, quantity supplied exceeds the quantity demanded

Question 36

total surplus

Answer 36

(same as economic surplus and social surplus) the sum of consumer surplus and producer surplus