Chapter 4

Question 1

The buildings and physical improvements, machines, and tools that business use to produce goods and services

Answer 1

Capital

Question 2

Goods that are used together. When the price of one good increases, the demand for its ____ decreases.

Answer 2

complementary good

Question 3

A table or graph showing the quantity of a good demanded at each price, assuming that all possible influencing factors other than price remain constant.

Answer 3

demand

Question 4

The price at which quantity supplied is equal to quantity demanded

Answer 4

equilibrium price

Question 5

The quantity of a good bought and sold when quantity supplied equals quantity demanded

Answer 5

equilibrium quantity

Question 6

A market is in ___ when the quantity demanded equals the quantity supplied.

Answer 6

equilibrium

Question 7

A good is ___ if in response to an increase in income, individuals decrease their consumption of the good.

Answer 7

inferior

Question 8

The resources - labor, land, and capital - businesses use in producing goods and services. Those resources are often described as factors of production.

Answer 8

inputs

Question 9

The principle that price and quantity demanded are inversely related. A decrease in price, assuming nothing else changes, will cause an increase in the quantity demanded and an increase in price will cause a decrease in the quantity demanded

Answer 9

law of demand

Question 10

The market price and the quantity exchanged in a perfectly competitive market will move toward the price and quantity where quantity supplied is equal to quantity demanded.

Answer 10

law of supply and demand

Question 11

A change in quantity demanded caused by a change in a good’s price.

Answer 11

Movements along a demand curve

Question 12

A change in quantity supplied caused by a change in a good’s price.

Answer 12

Movements along a supply curve

Question 13

A good is ___ if in response to an increase in income, individuals increase their consumption of the good.

Answer 13

normal

Question 14

The quantity of a good or service that consumers intend to purchase throughout a given time period at a certain price.

Answer 14

quantity demanded

Question 15

The quantity of a good or service that producers intend to sell throughout a given time period at a certain price.

Answer 15

quantity supplied

Question 16

A change in the quantities consumers are willing and able to purchase at each price. The shift is caused by changes other than a change in price. For instance, changes in income, tastes, expectations, the number of potential buyers, and prices of substitute and complementary goods

Answer 16

Shift in the demand curve

Question 17

A change in the quantities producers are willing and able to sell at each price. The shift is caused by changes other than a change in price. For instance, rising labor costs

Answer 17

shift in the supply curve

Question 18

At a single price, the quantity demanded is greater than the quantity supplied.

Answer 18

shortage

Question 19

Goods that can used in place of one another. When the price of one increases, the demand for a ____ good increases.

Answer 19

substitute

Question 20

A table (schedule) or graph (curve) showing the quantity of a good that producers are willing to supply at each price, assuming that all possible influencing factors other than price remain constant.

Answer 20

supply

Question 21

At a single price, the quantity supplied is greater than the quantity demanded.

Answer 21

surplus

Question 22

A “movement along a demand curve” is caused by ____. A “shift in the demand curve” is caused by ____.

Answer 22

change of price of the good; the other factors (taste, preference, income)

Question 23

An increase in demand will cause the equilibrium price and quantity to ___. A decrease in demand will cause the equilibrium price and quantity to ___.

Answer 23

increase; increase

Question 24

An increase in supply will cause the equilibrium price to ____ and the equilibrium quantity to ____. A decrease in supply will cause the equilibrium price to ____ and the equilibrium quantity to ____.

Answer 24

decrease; increase

increase; decrease

Question 25

Normal supply and demand implies that as price falls below equilibrium, the quantity demanded ____ and the quantity supplied ____. There is now a ____.

Answer 25

increases; decreases; shortage

Question 26

An increase in the prices of inputs will cause the equilibrium price to ______ and the equilibrium quantity to ______.

Answer 26

increase; decrease

Question 27

What happens to equilibrium price and quantity if the number of consumers increases?

Answer 27

Price increases; quantity decreases

Question 28

What is the name of the simple model where you can assume all other possible determinants do not change, there is only a change in price?

Answer 28

Ceteris-paribus

Question 29

A change in price changes ____. It does NOT change ____.

Answer 29

quantity demanded; demand