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Macroeconomics > Chapter 3 > Flashcards

Chapter 3 Flashcards

1
Q

Assuming that chicken and beef are substitutes, a decrease in the price of beef, other things being equal will…

A

decrease the demand for chicken

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2
Q

An increase in the supply of the product implies:

A

producers will now charge a lower price for a given quantity of output

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3
Q

a surplus of wheat:

A

is impossible if the price of wheat is below equilibrium

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4
Q

Assume that peanut butter and jelly are complementary goods, a decrease in the number of peanut butter suppliers will cause the :

A

demand for jelly to increase

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5
Q

Other things being equal, the effects of a decrease in the price of orange juice is represented by which of the following :

A

an increase in the quantity demanded for orange juice

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6
Q

the demand schedule for a good shows:

A

the specific quantity of the good that people are willing and able to buy at different prices

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7
Q

the price of a good will fall if:

A

there is an excess supply of the good

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8
Q

Ceteris paribus, a change in the price of a good always results in a change in:

A

quantity demanded

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9
Q

If quantity demanded is greater than quantity supplied, then according to the market process:

A

the price will rise

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10
Q

the law of demand indicates that the price of a good increases:

A

buyers buy less of it

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11
Q

Which of the following pairs is the best example of substitutes? coffee and cream, honey and biscuits, tortillas and salsa, hiking boots and athletic shoes

A

hiking boots and athletic shoes

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12
Q

If butter is a substitute for margarine, then an increase in the price of butter would be most likely to cause:

A

a rightward shift of demand for margarine

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13
Q

define the law of demand

A

the principle that there is an inverse relationship between the price of a good and the quantity buyers are willing to purchase in a defined time period ceteris paribus

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14
Q

define demand

A

a curve or schedule showing the various quantities of a product consumers are willing to purchase at possible prices during a specified period of time, ceteris paribus

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15
Q

define nonprice determinants aka demand shifters

A

factors that can influence the position of the demand curve and are not the price of the good its self

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16
Q

what are the major nonprice determinants

A

the number of buyers; tastes and preferences; income; expectations of future changes in prices, income, and availability of goods: and prices of related goods

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17
Q

what is a change in quantity demanded

A

a movement between points along a stationary demand curve, ceteris paribus

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18
Q

any decrease in price along the vertical axis will cause an increase in quantity demanded, measured along the horizontal axis under which law

A

the law of demand

19
Q

what is a change in demand

A

an increase of decrease in the quantity demanded at each possible price. an increase in demand is a rightward shift in the entire demand curve. a decrease in a demand shift is a leftward shift in the entire demand curve

20
Q

nonprice determinants can have what effect on the demand curve and why not the other, (shift or movement) and what causes this

A

shift which is caused by a change in price

21
Q

decrease in price causes what causes

A

increase in quantity demanded

22
Q

change in nonprice determinant causes

A

increase in demand

23
Q

using effect and termninology how is the demand curve affected by price increases

A

effect: upward movement along the demand curve
terminology: decrease in the quantity demanded

24
Q

using effect and termninology how is the demand curve affected by price decreases

A

downward movement along the demand curve

terminology: increase in the quantity demanded

25
Q

using effect and termninology how is the demand curve affected by nonprice determinant

A

effect: leftward or rightward shift in the demand curve
terminology: decrease or increase in demand

26
Q

define normal good

A

any good for which there is a direct relationship between changes in income and its demand curve

27
Q

define inferior good

A

any good for which there is an inverse relationship between changes in income and its demand curve

28
Q

define a substitute good

A

a good that competes with another good for consumer purchases, as a result there is a direct relationship between a price change for one good and the demand for its competitor good

29
Q

define complementary good

A

a good that is jointly consumed with another good, as a result, there is an inverse relationship between a price change for one good and the demand for its go together good

30
Q

T or F only at a higher price will it be profitable for sellers to incur the higher opportunity cost assoc with producing and supplying a larger quantity

A

True

31
Q

what is a change in supply

A

an increase or a decrease in the quantity supplied at each possible price an increase in supply is a rightward shift in the entire supply curve. a decrease in supply is a leftward shift in the entire supply curve

32
Q

changes in nonprice determinants can not produce only a shift in the supply curve and not a movement along the supply curve T or F

A

False

33
Q

increase in price causes…

A

increase in quantity supplied

34
Q

change in nonprice determinant causes….

A

increase in supply

35
Q

define market

A

any arrangement in which buyers and sellers interact to determin the price and quantity of goods and services exchanged

36
Q

define surplus

A

a market condition existing at any price where the quantity supplied is greater than the quantity demanded

37
Q

define shortage

A

a market condition existing at any price where the quantity supplied is less than the quantity demanded

38
Q

define equilibrium

A

a market condition that occurs at any price and quantity where the quantity demanded and the quantity supplied are equal (market clearing)

39
Q

graphically the intersection of the supply curve and the demand curve is the market equilibrium price-quantity point. when all other non price factors are ……

A

held constant this is the only stable coordinate on the graph

40
Q

what is caused by quantity supplied exceeds quantity demanded and causes price decreases to equilibrium price

A

surplus results from and causes….

41
Q

what causation chain results in equilibrium price established

A

quantity demanded = quantity supplied causes neither surplus nor shortage causes equilibrium price established

42
Q

what causation chain involves shortage

A

quantity demanded exceeds quantity supplied causes shortage causes price increases to equilibrium price

43
Q

define price system

A

a mechanism that uses the forces of supply and demand to create an equilibrium through rising and falling prices

Macroeconomics (17 decks)

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