Chapter 4

Question 1

Your willingness to pay =

Answer 1

Happiness

Question 2

In a perfect market there are a large number of _______ and _________.

Answer 2

Buyers and sellers

Question 3

Define the following;
P*
Q*

Answer 3

Equilibrium Price
Equilibrium Quantity

Question 4

Quantity demand is = to quantity ________

Answer 4

Supplied
(QD=QP)

Question 5

When quantity supply is larger than quantity demand, this is called

Answer 5

Surplus

Question 6

When quantity demand is larger than quantity supplied, this is called

Answer 6

Shortage

Question 7

As demand price is brought down, supply price is brought up to meet equilibrium (true or false)

Answer 7

False

Question 8

If there is a shortage of high skilled workers, one solution could be to

Answer 8

Increase the wages offered to new hires

Question 9

Markets are ________ that brings together buyers and sellers.

Answer 9

Settings

Question 10

Shortages lead prices to ________.

Answer 10

Rise

Question 11

Surplus leads prices to _________.

Answer 11

Fall

Question 12

If prices are ________ there is a shortage, and if prices are falling there is a ________.

Answer 12

Rising, surplus

Question 13

What are the 3 symptoms of equilibrium:

Answer 13

1) Queuing
2) Bundling for extras
3) Secondary Market

Question 14

When price of demand increases:
Price _______
Quantity _______

Answer 14

Increases, decreases

Question 15

When price of supply increases:
Price ________
Quantity _______

Answer 15

Decrease, increase