Chapter 3 - Supply and Demand

Question 1

What is a market?

Answer 1

Any place where goods are bought and sold. Includes interaction of all buyers and sellers. exists when and where an EXCHANGE takes place

Question 2

What is a barter?

Answer 2

DIRECT EXCHANGE of one good for another, without the use of money

Question 3

Market transaction requires _______

Answer 3

supply and demans

Question 4

Supply and demand mist include a __________-

Answer 4

ABILITY and WILLINGNESS to buy/sell specific quantities of a good at alternative prices at a given time period

Question 5

Every market transaction involves a(n) ….?

Answer 5

EXCHANGE

Question 6

What 2 things determine how much someone is willing to pay for something?

Answer 6

INCOME and OPPORTUNITY COST

Question 7

What does the demand curve depict?

Answer 7

Describes the quantities of a good a consumer is willing and able to buy at alternative prices in a given time period

Question 8

What is the term for a table showing demand?? What are the 2 columns?

Answer 8

demand schedule. Price and Quantity demanded

Question 9

According to the law of demand, as price goes down, demand goes ______

Answer 9

up

Question 10

What is on the x and y axis on a demand curve

Answer 10

Y: price
X: Quantity

Question 11

Demand curve is a ______sloping curve

Answer 11

downward

Question 12

Anything other than ____ will cause a shift in the demand curve

Answer 12

price

Question 13

Rise in income would cause an expansion or shrinkage of the demand curve?

Answer 13

Expansion

Question 14

Chicken contamination would cause a left or right shift in the demand curve?

Answer 14

left

Question 15

Movement ALONG the demand curve occurs when there is a change in ____

Answer 15

price

Question 16

Supply schedule shows ______ and ______

Answer 16

price and quantity supplied

Question 17

As price goes up, quantity supplied goes _____

Answer 17

up

Question 18

Supply curve is a ______ sloping curve

Answer 18

upwards

Question 19

Lower cost of raising chicken would cause a left or right shift in supply curve?

Answer 19

right

Question 20

on the SUPPLY AND DEMAND curve below equilibrium represents a ______

Answer 20

shortage. quantity demanded exceeds supply

Question 21

Will the equilibrium point always remain constant?

Answer 21

NO

Question 22

Change in the PRICE of a good always indicates…..?

Answer 22

Movement along the curve

Question 23

What is a price ceiling and where does it appear on the SUPPLY AND DEMAND curve?

Answer 23

price ceiling = upper limit (maximum price) imposed on the price of a good or service. BELOW equilibrium on the graph

Question 24

What are the 3 effects of having a price ceiling?

Answer 24

-increase in quantity demanded
-decrease in quantity supplied
-creates a market SHORTAGE

Question 25

What is a price floor and where does it appear on the SUPPLY AND DEMAND graph?

Answer 25

price floor = lower limit (minimum price) imposed on the price of a good or service. Appears ABOVE equilibrium point

Question 26

What are the 3 effects of price FLOORS

Answer 26

-increase in quantity supplied
-decrease in quantity demanded
-creates a market SURPLUS