Chp 4

Question 1

markets buyers determine _____
and their sellers determine _____

Answer 1

1. demand
2. supply

Question 2

competitive markets have…

Answer 2

many buyers and sellers

Question 3

monoply

Answer 3

only one seller in the market

Question 4

perfectly cpmpeteitive

Answer 4

1. goods for sale are exactly the same
2. many buyers and sellers, limited control over market price, the market price is at a medium where sellers can sell all they want and buyers can buy all they want

Question 5

amount of goods that buyers are willing to and able to buy

Answer 5

quantity demanded

Question 6

law of demand

Answer 6

the inverse relationship between price and quantity
ex. price is up when the quantity is low

Question 7

which way would the demand curve shift if demand increases

Answer 7

right

Question 8

variables that shift the demand curve

Answer 8

income
~demand for good ^ when income ^ IF good is normal
~demand for good ▿ when income ^ IF good is inferior
tastes
expectations about the future
number of buyers

Question 9

amount of good sellers are willing and are able to buy

Answer 9

quantity supplied

Question 10

law of supply

Answer 10

all other things equal , when the price of a good or service ^increases the quanity of goods and services suppliers offer increase

Question 11

when supply increases the curve shifts ____ on the gragh

Answer 11

right

Question 12

variables that shift the supply curve

Answer 12

-input prices (inputs increase= decreases supply)
-technology (advance in technology= increase in supply)
-expectations about fututre affect current cupply
-number of sellers increase = market supply increase

Question 13

market equilibrium

Answer 13

point which Supply curve and Demand curve intersect. the equilibrium price is the price at this point. the equilibrium quantity is the quantity at this point.

Question 14

quantity supplied is larger than the quantity demanded

Answer 14

surplus causing a lowering in price

Question 15

quantity demanded is larger than the quantity able to be supplied

Answer 15

shortage causing a heightening of price

Question 16

bringing the quantity demanded and the quantity supplied into balance

Answer 16

law of supply and demand

Question 17

three steps ti analyzing changes in the equilibrium

Answer 17

1. decide the event shifts supply or demand or both
2. decide if curve shifts left or right
3. explain how the shift affects the equilibrium price

Question 18

shifts in curves versus movement along curves

Answer 18

shift in supply –> change in supply

movement along fixed supply curve–> change in in quantity supply

Shift in demand curve→ change in demand

Movement along fixed demand curve → Change in quantity demand