Chapter 4

Question 1

In today’s society we tend to find our goods and services in

Answer 1

markets.

Question 2

Market

Answer 2

any arrangement that brings buyers and sellers together.

Question 3

A market has two sides:

Answer 3

buyers (demanders) and sellers (suppliers) and they are the one’s who define it.

Question 4

Quantity Demanded

Answer 4

the amount of any good, service, or resource that people are willing and able to buy during a specified period at a specific price. It is one quantity at one price.

Question 5

Demand

Answer 5

the relationship between the quantity demanded and the price of a good when al other influences on buying plans remain the same. It is a list of quantities at different prices.

Question 6

The Law of Demand states that

Answer 6

other things remaining the same, if the price of a good rises, the quantity demanded of that good decreases; and if the price of a good falls, the quantity demanded of that good increases.

Question 7

A demand schedule

Answer 7

a list of the quantities demanded at each different price when all the other influences on buying plans remain the same.

Question 8

A demand curve

Answer 8

a graph of the relationship between the quantity demanded of a good and its price when all other influences on buying plans remain the same.

Question 9

Change in Demand

Answer 9

refers to a change in the quantity that people plan to buy when any influence on buying plans other than the price of the good changes.

Question 10

The main influences on buying plans that change demand:

Answer 10

Prices of related goods
Expected future prices
Income
Expected future income and credit
Number of buyers
Preferences

Question 11

A substitute

Answer 11

a good that can be consumed in place for another good.

Question 12

A complement

Answer 12

is a good that can be consumed with another good.

Question 13

A normal good

Answer 13

a good for which demand increases (decreases) when income increases (decreases)

Question 14

An inferior good

Answer 14

is a good for which demand decreases (increases) when income increases (decreases).

Question 15

A change in quantity demanded is _____ from a change in demand.

Answer 15

Different

Question 16

A change in quantity demanded refers to

Answer 16

a change in the quantity of a good that people plan to buy that results from a change in the price of the good with all other influences on buying plans remaining the same. This change does not shift the demand curve, but rather moves along it.

Question 17

Quantity Supplied

Answer 17

The amount of any good, service, or resource that people are willing and able to sell during a specified period at a specified price. It is one quantity at one price.

Question 18

Supply

Answer 18

The relationship between the quantity supplied and the price of a good when al other influences on selling plans remain the same. It is a list of quantities at different prices.

Question 19

The Law of Supply states

Answer 19

That other things remaining the same, if the price of a good rises, the quantity supplied of that good increases; and if the price of a good falls, the quantity supplied of that good decreases.

Question 20

Supply Schedule

Answer 20

a list of the quantities supply at each different price when all the other influences on selling plans remain the same.

Question 21

Supply Curve

Answer 21

a graph of the relationship between the quantity supplied of a good and its price when all other influences on selling plans remain the same.

Question 22

Change in Supply

Answer 22

refers to a change in the quantity that suppliers plan to sell when any influence on selling plans other than the price of the good changes.

Question 23

The main influences on selling plans that change supply

Answer 23

Prices of related goods
Prices of resources and other inputs
Expected future prices
Number of sellers
Productivity

Question 24

A substitute in production for a good is

Answer 24

another good that can be produced in its place.

Question 25

A complement in production of a good is

Answer 25

another good that is produced along with it.

Question 26

A change in quantity supplied is ______ from a change in supply.

Answer 26

Different

Question 27

A change in quantity supplied refers to ______. Does it shift the supply curve?

Answer 27

a change in the quantity of a good that suppliers plan to sell that results from a change in the price of the good with all other influences on selling plans remaining the same. This change does not shift the supply curve, but rather moves along it.

Question 28

Market equilibrium occurs when

Answer 28

the quantity demanded equals the quantity supplied—when buyers’ and sellers’ plans are in balance.

Question 29

When we combine the demand curve and supply curve we capture the

Answer 29

full picture of a market and the market equilibrium.

Question 30

At the equilibrium price, the quantity demanded equals the

Answer 30

quantity supplied.

Question 31

The equilibrium quantity is the

Answer 31

quantity bought and sold at the equilibrium price.

Question 32

Surplus

Answer 32

the quantity supplied exceeds the quantity demanded.

Question 33

Shortage

Answer 33

the quantity demanded exceeds the quantity supplied.

Question 34

A market can be out of balance in the event of a

Answer 34

surplus or shortage

Question 35

law of market forces indicates that

Answer 35

when there is a surplus, the price falls; and when there is a shortage, the price rises.

Question 36

Factors that shift Demand

Answer 36

Prices of related goods
Expected future prices
Income
Expected future income and credit
Number of buyers
Preferences

Question 37

Factors that shift Supply

Answer 37

Prices of related goods
Prices of resources and other inputs
Expected future prices
Number of sellers
Productivity