Chapter 3

Question 1

quantity demanded

Answer 1

the amount of good or service that consumers want to purchase during some time period

Question 2

demand schedule

Answer 2

a table showing the relationship between quantity demanded and the price of a commodity, other things being equal

Question 3

demand curve

Answer 3

graphical representation of the relationship between quantity demanded and the price of a commodity, other things being equal

Question 4

demand

Answer 4

the entire relationship between the quantity of a commodity that buyers want to purchase and the price of that commodity, other things being equal

Question 5

substitutes in consumption

Answer 5

goods that can be used in place of another good to satisfy similar needs or desires

Question 6

complements in consumption

Answer 6

goods that tend to be consumed together

Question 7

change in demand

Answer 7

change in the quantity demanded at each possible price of the commodity, represented by a shift in the WHOLE demand curve

Question 8

change in quantity demanded

Answer 8

change in the specific quantity of the good demanded, represented by a change from one POINT on a demand curve to another point, either on the original demand curve or on a new one

Question 9

quantity supplied

Answer 9

the amount of a commodity that producers want to sell during some time period

Question 10

supply schedule

Answer 10

a table showing the relationship between quantity supplied and the price of a commodity, other things being equal

Question 11

supply curve

Answer 11

the graphical representation of the relationship between quantity supplied and the price of a commodity, other things being equal

Question 12

supply

Answer 12

the entire relationship between the quantity of some commodity that producers wish to sell and the price of that commodity other things being equal

Question 13

change in supply

Answer 13

a change in the quantity supplied at each possible price of the commodity, represented by a shift in the whole supply curve

Question 14

change in quantity supplied

Answer 14

a change in the specific quantity supplied, represented by a change from one point on a supply curve to another point, either on the original supply curve or on a new one

Question 15

market

Answer 15

any situation in which buyers and sellers can negotiate the exchange of goods or services

Question 16

excess demand

Answer 16

a situation in which at the given price, quantity demanded exceeds quantity supplied

Question 17

excess supply

Answer 17

a situation in which, at a given price, quantity supplied exceeds quantity demanded

Question 18

equilibrium price

Answer 18

the price at which quantity demanded equals quantity supplied. also called the market-clearing price

Question 19

disequilibrium price

Answer 19

price at which quantity demanded does not equal quantity supplied

Question 20

disequilibrium

Answer 20

a situation in a market in which there is excess demand or excess supply

Question 21

comparative statics

Answer 21

the derivation of predictions by analyzing the effect of a change in some exogenous variable on the equilibrium

Question 22

absolute price

Answer 22

the amount of money that must be spent to acquire one unit of a commodity (aka money price)

Question 23

relative price

Answer 23

the ratio of the money price of one commodity to the money price of another commodity; ratio of 2 absolute prices

Question 24

what factors influence quantity demanded? (6)

Answer 24

• product’s price
• consumers income
• prices of other products
• tastes
• population
• expectations about the future

Question 25

the price of a product and the quantity demanded are related (positively/negatively), other things being equal

Answer 25

negatively

Question 26

the demand curve shows the relationship between the _______ _______ and_____

Answer 26

quantity demanded; price

Question 27

true or false: when the price is held constant, there can be a change in quantity demanded

Answer 27

true; the whole demand curve can shift and result in a new point being made

Question 28

the price of a product and the quantity supplied are related (positively/negatively)

Answer 28

positively

Question 29

the supply curve represents the relationship between _____ _____ and _____

Answer 29

quantity supplied; price

Question 30

what will changing any variable other than the product's price do?

Answer 30

shift the curve to a new position

Question 31

a demand curve will shift to the RIGHT when there is an (increase/decrease) in demand

Answer 31

increase

Question 32

when the whole demand curve moves, this is a ________

Answer 32

change in demand

Question 33

when a point along a demand curve moves, this is a ______

Answer 33

change in quantity demanded

Question 34

what factors influence quantity supplied?

Answer 34

- product's price - cost of inputs - number of suppliers - government taxes or subsidies - state of technology - prices of other products

Question 35

demand curve goes (up/down); supply curve goes (up/down)

Answer 35

demand: down supply: up

Question 36

what does ceteris paribus mean?

Answer 36

all other variables are held equal

Question 37

quantity _____ or quantity _____ is used to refer to actual purchases

Answer 37

quantity bought or quantity exchanged

Question 38

distinguish between flow and stock variables

Answer 38

time - flow is per unit of time (x amount of eggs sold, how long did it take?); rate - stock addresses a point in time (x amount of time given, how many eggs sold?); position

Question 39

what would shift the demand curve to the right regarding income?

Answer 39

increase in income

Question 40

what would shift the demand curve to the right regarding substitute products?

Answer 40

increase in price of substitute product

Question 41

what would shift the demand curve to the right regarding complement products?

Answer 41

decrease in price of complement product

Question 42

what would shift the demand curve to the right regarding taste?

Answer 42

change in taste in favor of a product

Question 43

what would shift the demand curve to the right regarding population?

Answer 43

increase in population

Question 44

what would shift the supply curve to the right regarding inputs?

Answer 44

decrease in the price of inputs

Question 45

what would shift the supply curve to the right regarding technology?

Answer 45

innovation that decreases the price of inputs

Question 46

what will shift the supply curve to the right regarding gov't taxes/subsidies?

Answer 46

increase in subsidy, decrease in tax

Question 47

what will shift the supply curve to the right regarding prices of substitutes?

Answer 47

decrease in the market price of the substitute (the item of focus will be more profitable)

Question 48

what will shift the supply curve to the right regarding prices of complements?

Answer 48

increase in market price price of the complement

Question 49

what will shift the supply curve to the right regarding number of suppliers

Answer 49

increasing the number of suppliers

Question 50

what causes excess demand?

Answer 50

shortage of supply

Question 51

what causes excess supply?

Answer 51

surplus in supply

Question 52

excess supply causes (upward/downward) pressure on price

Answer 52

downward

Question 53

excess demand causes (upward/downward) pressure on price

Answer 53

upward