Chapter 3

Question 1

demand

Answer 1

the willingness and ability of purchasers to buy goods or services

Question 2

supply

Answer 2

the willingness of producers and merchandisers to provide goods and services

Question 3

market price

Answer 3

the prevailing price for a specific good or service at a particular time in a given market

Question 4

market quantity sold

Answer 4

the number of “units” of a specific good or service sold in a given market during a particular period

Question 5

positive (or direct) relationship

Answer 5

the relationship between two variables when an increase in one is associated with an increase in the other variable

Question 6

individual supply

Answer 6

the supply of one particular seller

Question 7

market (or aggregate) supply

Answer 7

the supply from all sellers in a particular market

Question 8

supply schedule

Answer 8

a table showing the relationship between price and quantity supplied

Question 9

supply curve

Answer 9

a curve indicating the quantities that sellers are willing to supply at various prices

Question 10

change is quantity supplied

Answer 10

movement along a supply curve in response to a price change

Question 11

ceteris paribus

Answer 11

a Latin phrase that means “other things equal” or “all else constant”

Question 12

change in supply

Answer 12

a shift of the entire supply curve, in response to something changing other than price

Question 13

nonprice determinants of supply

Answer 13

any factor that affects the quantity supplied other than the price of the good or service offered for sale

Question 14

demand schedule

Answer 14

a table showing the relationship between price and quantity demanded

Question 15

demand curve

Answer 15

a curve indicating the quantities that buyers are willing to purchase at various prices

Question 16

negative (or inverse) relationship

Answer 16

the relationship between two variables if an increase in one is associated with a decrease in the other variable

Question 17

market (or aggregate) demand

Answer 17

the demand from all buyers in a particular market

Question 18

individual demand

Answer 18

the demand of one particular buyer

Question 19

change in the quantity demanded

Answer 19

movement along a demand curve in response to a price change

Question 20

change in demand

Answer 20

a shift of the entire demand curve in response to something changing other than price

Question 21

nonprice determinants of demand

Answer 21

any factor that affects the quantity demanded, other than the price of the good or service being demanded

Question 22

substitute good

Answer 22

a good that can be used in place of another good

Question 23

complementary good

Answer 23

a good that is used along with another good

Question 24

surplus

Answer 24

a situation in which the quantity that sellers are prepared to sell at a particular price exceeds the quantity that buyers are willing to buy at that price

Question 25

shortage

Answer 25

a situation in which the quantity demanded at a particular price exceeds the quantity that sellers are willing to supply

Question 26

market equilibrium

Answer 26

a situation in which the quantity supplied equals the quantity demanded, and thus there is no pressure for change in price or quantity bought or sold

Question 27

theory of market qdjustment

Answer 27

the theory that market forces will tend to make shortages and surpluses disappear

Question 28

market disequilibrium

Answer 28

a situation of either shortage or surplus

Question 29

markup (or cost-plus) pricing

Answer 29

a method of setting prices in which the seller adds a fixed percentage amount to his or her costs of production

Question 30

precise

Answer 30

describes something that is exact (though it may be unrealistic)

Question 31

accurate

Answer 31

describes something that is correct (even if only in a general way)