Chapter 4 - The Market Forces Of S&D

Question 1

Market

Answer 1

Is a group of buyers & sellers of a particular product

Question 2

Competitive market

Answer 2

Is one with many buyers & sellers, each has a negligible effect on price

Question 3

Perfectly competitive market

Answer 3

• All goods are exactly the same

- buyers & sellers so numerous that no one can affect market price - each is a “price taker”

Question 4

Quantity demanded

Answer 4

The # demanded of any good is the amount of the food that buyers are willing & able to purchase

Question 5

Law of demand

Answer 5

The claim that the quantity demanded of a good falls when the price of the good rises

Question 6

Demand curve shifters

Answer 6

• # of buyers
• income
• prices of related goods ( substitutes & complements)
• tastes
• expectations

Question 7

Normal Good

Answer 7

Positively related to income.

Question 8

Inferior good

Answer 8

Negatively related to income

Question 9

Quantity supplied

Answer 9

The amount that sellers are willing & able to sell

Question 10

Law of supply

Answer 10

The claim that the quantity supplied of a good rises when the price of the good rises

Question 11

Supply curve shifters

Answer 11

• Input Prices
• Technology
• # of sellers
• Expectations