Chapter 3

Question 1

What is the goal of a consumer in a market economy?

Answer 1

Buying most amount of goods at lower prices

Question 2

What is the goal of a business in a market economy?

Answer 2

To make a profit

Question 3

Circular flow factor market?

Answer 3

Consumers, businesses firms, and governments

Question 4

What is a product market?

Answer 4

Any place where goods/services are sold and bought

Question 5

When does a buyer have a demand for a good?

Answer 5

When quantities are low and prices are high

Question 6

What is the law of demand?

Answer 6

Quantity of product in demand that increases as its prices fall

Question 7

How do we calculate market demand?

Answer 7

Number of potential buyers and their tastes, incomes, other goods, and expectations

Question 8

What are the determinants of market supply?

Answer 8

Technology, factor costs, other goods, tastes/subsidies , expectations, and number of sellers

Question 9

What does the law of supply imply?

Answer 9

Quantity of goods supplied in a given period which increases with price

Question 10

How do we calculate market supply?

Answer 10

Based on movements of goods or changes to supply

Question 11

Market equilibrium

Answer 11

Market clearing price - no oversupply or shortage

Question 12

Are government goods delivered for free?

Answer 12

No - we pay taxes

Question 13

Demand curve?

Answer 13

Price falls and people buy more

Question 14

Shift in demand?

Answer 14

The curve decreases and product is needed

Question 15

Complementary goods?

Answer 15

Goods sold in combination of price of goods rises and the demand of goods fall

Question 16

Substitute goods?

Answer 16

Goods that substitute for each other when price of goods rise and the demand increases