Chapter 3 – Demand, Supply, And Market Equilibrium

Question 0

Law of demand

Answer 0

Other things equal, as price falls the quantity demanded rises, and vice versa.

Question 1

Demand

Answer 1

The schedule or curve that shows the various amount of a product that consumers are willing and able to purchase at each of a series of possible prices during a specified period of time.

Question 2

Quantity demanded

Answer 2

The amount of a good or service buyers or a buyer desire to purchase at a particular price during some period.

Question 3

Diminishing marginal utility

Answer 3

As a consumer increases the consumption of a good or service, the marginal utility obtain from each additional unit of a good or service decreases.

Question 4

Income effect

Answer 4

A change in the price of a product changes of consumers real income or purchasing power and thus the quantity of the product purchased.

Question 5

Substitution effect

Answer 5

A change in the price of a product changes the relative expensive miss of that good and hence changes the willingness to buy it rather than other goods.

Question 6

Demand curve

Answer 6

A curve illustrating the inverse (negative) relationship between the quantity demanded of a good or service and it’s priced, other things equal.

Question 7

Determinants of demand

Answer 7

Factors other than price the determine the quantity demanded of a good or service.

Question 8

Increase in demand

Answer 8

An increase in the quantity demanded of a good or service and every price; a shift of the demand curve to the right.

Question 9

Normal good

Answer 9

A good or service who’s consumption rises when income increases and falls when income decreases, price remaining constant.

Question 10

Inferior good

Answer 10

A good or service who’s consumption falls when income increases and rises one income decreases, price remaining constant.

Question 11

Substitute goods

Answer 11

Products or services that can be used in place of each other.

Question 12

Complementary goods

Answer 12

Products and services that are used together.

Question 13

Expectations

Answer 13

The anticipations of consumers, firms, and others about future economic conditions.

Question 14

Change in demand

Answer 14

A change in the quantity demanded of a good or service that every prices; a shift of the entire demand curve to the right (increase in demand) or to the left (decrease in demand).

Question 15

Change in quantity demanded

Answer 15

Of movement from one point to another on the fixed demand curve.

Question 16

Supply

Answer 16

A schedule or curve that shows the amounts of the product the producers are willing and able to make available for sale at each of the series of possible prices during a specific period.

Question 17

Quantity supplied

Answer 17

The amount of a good or service producers offered to sell at a particular price during some period.

Question 18

Law of supply

Answer 18

The principle that, other things equal, an increase in the price of a product will increase the quantity of it supplied, and a decrease in the price of a product will decrease the quantity of it supplied.

Question 19

Supply curve

Answer 19

Occurred illustrating the positive relationship between the quantity supplied of a good or service and it’s priced, other things equal.

Question 20

Determinants of supply

Answer 20

Causes other than price to determine the quantity supplied of a good or service.

Question 21

Tax

Answer 21

and in voluntary payment of money to a government by household or firm for which the household or firm receives no good or service directly in return.

Question 22

Property tax

Answer 22

A tax on the value of property for example; capital, land, stocks and bonds, and other assets, owned by firms and households.

Question 23

Change in supply

Answer 23

A change in the quantity supplied of a good or service that every price; a shift of the supply curve to the left or right.

Question 24

Increase in supply

Answer 24

An increase in the quantity supplied of a good or service at every price; a shift in the supply curve to the right.

Question 25

Change in quantity supplied

Answer 25

A movement from one point to another on a fixed supply curve.

Question 26

Equilibrium price

Answer 26

The price in a competitive market which the quantity demanded and the quantity supplied are equal.

Question 27

Equilibrium quantity

Answer 27

The quantity demanded and supply to be equilibrium price in a competitive market.

Question 28

Surplus

Answer 28

The amount by which the quantity supplied of a product exceeds the quantity demanded at a specific above equilibrium price.

Question 29

Shortage

Answer 29

The amount by which the quantity demanded of a product exceeds the quantity supplied of a specific below equilibrium price.

Question 30

Rationing function of prices

Answer 30

The ability of the competitive forces of supply and demand to establish a price at which selling and buying decisions are consistent.

Question 31

Productive efficiency

Answer 31

The production of a good in the least costly way.

Question 32

Allocative efficiency

Answer 32

The distribution of resources among firms and industry to produce the goods most wanted by society.