Chapter 3: Law of Demand and Supply

Question 1

refers to the quantity of a product, item, commodity, or service that suppliers are willing to make available at a given price.

Answer 1

Supply

Question 2

refers to the quantity of a product, item, commodity, or service that consumers are willing and able to acquire available at a given price.

Answer 2

Demand

Question 3

The blank is one of the most fundamental economic laws that are blank to practical ideas.

Answer 3

law of supply and demand

inextricably linked

Question 4

A group of buyers and sellers of a particular good or service.

Answer 4

Market

Question 5

A market in which there are many buyers and many sellers so that each has a negligible impact on the market price.

Answer 5

Competitive Market

Question 6

A market that has only one seller

Answer 6

Monopoly

Question 7

The amount of good that buyers are willing and able to buy at a certain price level

Answer 7

Quantity Demanded

Question 8

The result of the Law of demand: individuals would blank a commodity that requires them to blank of another item they value more.

Answer 8

naturally avoid purchasing

forego the consumption

Question 9

The claim that other things being equal, the quantity demanded of a good falls when the price rises, and vice versa.

Answer 9

Law of demand

Question 10

A table in economics that depicts the quantity demanded on an item or service at various price levels.

Answer 10

Demand Schedule

Question 11

A graph of the relationship between the price of a good and the quantity demanded

Answer 11

Demand Curve

Question 12

Sum of individual demand curves

Answer 12

Market demand

Question 13

Determinants of Demand that shifts the demand curve

Answer 13

• Consumer’s Income
• Consumer’s Expectations of Future Prices
• Prices of Related Products
• Consumer’s Taste and Preference
• Population

Question 14

How does consumers’ income affect demand?

Answer 14

Because your income dictates the way you spend your money

Question 15

demand increase when income increases and vice versa, the good is called?

Answer 15

normal goods

Question 16

demand falls when income rises and vice versa, the good is called?

Answer 16

inferior goods

Question 17

Example of normal goods

Answer 17

Basic necessities such as rice, utilities, medical and dental services

Question 18

Example of inferior goods

Answer 18

A lower income person chooses public transportation than acquiring cars, and if a person has a higher income, he tends to buy cars rather than choosing public transportation.

Question 19

How does Consumer’s Expectations of Future Prices affect demand?

Answer 19

Expecting prices in future periods affect the way we spend currently, therefore, affecting the demand

Question 20

Example of Consumers’ Expectations

Answer 20

increase on the price of gasoline in the future causes panic-buying for car owners to maximize their purchasing power.

Question 21

How do Prices of Related Products affect demand?

Answer 21

Demand for a particular good will change the demand for related goods

Question 22

Types of Related Products according to availability

Answer 22

Substitute

Complimentary

Question 23

two goods for which an increase in the price of one leads to an increase in the demand of the other,
Goods used in place for other goods

Answer 23

Substitute

Question 24

two goods for which an increase in the price of one leads to a decrease in the demand of the other,
Goods that cannot be used without the other

Answer 24

Complimentary

Question 25

Example of Substitute

Answer 25

Frozen Yogurt and Ice cream

Question 26

Example of Complements

Answer 26

Gasoline and Automobiles

Question 27

The most obvious determinant of demand

Answer 27

Consumer’s Taste and Preference

Question 28

How do Consumers' Tastes and Preferences affect demand?

Answer 28

Because an inclination toward a good affects demand

Question 29

Determinant of demand that is affected by religion, culture, age, traditions, trend, technology, and other historical and psychological forces.

Answer 29

Consumer’s Taste and Preference

Question 30

How does Population affect demand?

Answer 30

An increase in population also increases the demand because there will be another addition to the market demand.

Question 31

The mathematical representation of the relationship between the quantity good sought and the factors that affect the consumers’ willingness and capacity to purchase the good.

Answer 31

Demand Function

Question 32

Demand Function

Answer 32

Qd=f(P,Prg,Y) Qxt=f(Pxt,Yt,Prt,P^e(x,t+i),T) Qdx = a - bPx

Question 33

The variables in the right are being held blank as the demand curve is plotted

Answer 33

constant

Question 34

If it is a compliment, its price coefficient will be blank. If it is a substitute, its price coefficient will be blank.

Answer 34

negative | positive

Question 35

The coefficient of income is positive indicate that it is blank. If the coefficient is negative, the good is blank.

Answer 35

normal good | inferior good

Question 36

Blank is driven by demand.

Answer 36

Economic growth

Question 37

Governments and central banks stimulate demand in order to bring blank to an end.

Answer 37

recessions

Question 38

However, economics simplifies the equation to emphasize the blank of individual demand and the sixth factor of blank.

Answer 38

five key drivers | aggregate demand

Question 39

the number of goods or services that suppliers are willing to produce at a given market price.

Answer 39

quantity supplied

Question 40

The claim that, other things being equal, the quantity supplied of a good rises when the price of the good rises.

Answer 40

Law of Supply

Question 41

a table that shows the relationship between the price of a good and the quantity supplied

Answer 41

Supply Schedule

Question 42

A graph of the relationship between the price of a good and the quantity supplied

Answer 42

Supply Curve

Question 43

The sum of the supplies of all sellers.

Answer 43

Market Supply

Question 44

Determinants of supply that shifts the supply curve

Answer 44

Input Prices, Technology, Expectations, Number of Sellers, Government Regulations (Tax, subsidies, and policies)

Question 45

How do Input Prices affect supply?

Answer 45

Increases in the price of the raw materials in order to produce outputs affect the ability of a firm to produce.

Question 46

How does Technology affect supply?

Answer 46

Technological advancements could reduce firms’ costs and could produce more outputs.

Question 47

How do Expectations affect supply?

Answer 47

Increase in future price could make producers manufacture less in the current period and produce more at a future period.

Question 48

How does Number of Sellers affect supply?

Answer 48

An increase in the number of sellers means that the supply will increase in the market and if the number of sellers decreases it will prove otherwise.

Question 49

How do Government regulations (Tax, subsidies, and policies) affect supply?

Answer 49

Taxes and regulations hinder firms to produce more outputs and subsidies encourages firms to produce more.

Question 50

a situation in which the market price has reached the level at which quantity supplied equals quantity demanded

Answer 50

Market equilibrium

Question 51

A mathematical representation of the relationship between the quantity of a service or product required, its price and other associated factors.

Answer 51

Supply Function

Question 52

Supply Function

Answer 52

``` Qsx = f(P_x,T,C,Exp,Grt,Gs,M) Qsx = f(Px) Qsx = -c + dPx ```

Question 53

The supply of a good is blank to the prices of inputs used to make the good.

Answer 53

Negatively related

Question 54

Machinery or other technologies reduce what?

Answer 54

Cost and Labor

Question 55

Change in Demand

Answer 55

Shifts demand curve to another.

Question 56

Changes in Quantity Demand

Answer 56

Movement along the curve as other remain variables remain constant.

Question 57

The degree to which the quantity fluctuates in response to variations in price is called?

Answer 57

Demand Elasticity

Question 58

Change in Supply

Answer 58

Shifts supply curve to another.

Question 59

Changes in Quantity Supplied

Answer 59

Movement along the supply curve as other variables remain constant.

Question 60

A situation in which quantity supplied is greater than quantity demanded.

Answer 60

Surplus

Question 61

Also called excess supply

Answer 61

Surplus

Question 62

A situation in which quantity demanded is greater than quantity supplied.

Answer 62

Shortage

Question 63

Also called excess demand

Answer 63

Shortage

Question 64

The claim that the price of any good adjusts to bring the quantity supplied and the quantity demanded that good into balance

Answer 64

Law of supply and demand