chapter 4

Question 1

market

Answer 1

a group of buyers or sellers of a good or service

Question 2

competitive market

Answer 2

many buyers and sellers, has a negligible impact on price

Question 3

perfectly competitive market

Answer 3

• all goods are identical
• so many buyers/sellers that no one can effect market price
• ‘price takers’

Question 4

quantity demanded

Answer 4

the amount that buyers are willing and able to purchase

Question 5

law of demand

Answer 5

when price rises, the quantity demanded falls

Question 6

demand schedule

Answer 6

TABLE that shows the relationship between price and quantity demanded

Question 7

demand curve

Answer 7

GRAPH that shows the relationship between price and the quantity demanded

Question 8

demand curve shifters

Answer 8

Price of related goods
Income
Number of buyers
Tastes
Expectations

Question 9

normal good

Answer 9

an increase in income leads to an increase in demand

Question 10

inferior good

Answer 10

increase in income leads to a decrease in demand

Question 11

substitute good

Answer 11

when the price of one good increases, the demands in the other good increases

Question 12

complementary good

Answer 12

increase in the price of one leads to a decrease in the price of another

Question 13

quantity supplied

Answer 13

amount of a good sellers are willing and able to sell

Question 14

law of supply

Answer 14

when price rises, the quantity supplied increases

Question 15

supply schedule

Answer 15

TABLE that shows the relationship between price and the quantity supplied

Question 16

supply curve

Answer 16

GRAPH that shows the relationship between price and the quantity supplied

Question 17

supply curve shifters

Answer 17

Technology
Input prices
Number of sellers
Expectations