Economics Chapter 3

Question 0

A schedule showing how much of a good or service people will purchase at any price during a specified period of time, other things being held constant.

Answer 0

Demand

Question 1

All of the arrangements that individuals have for exchanging with one another. Ex:labor market, automobile market, and credit market

Answer 1

Market

Question 2

The observation that their is a negative or inverse relationship between the price of any good or service and the quantity demanded holding other factors constant. So a change in price causes a change in demand in which direction?

Answer 2

Law of demand— it has an inverse relationship price goes up and demand goes down and vice versao

Question 3

The money price of one commodity divided by the price of another commodity; the number of units of one commodity that a must be sacrificed to purchase another unit if another commodity

Answer 3

Relative price

Question 4

The price expressed in today’s dollars; also called nominal or expressed price

Answer 4

Money price

Question 5

A graphical representation of the demand schedule; a negatively sloped line showing the inverse relationship between price and quantity demanded (other things being equal)

Answer 5

Demand curve

Question 6

The demand of all consumers in the marketplace for a particular good or service. The summation at each price of the quantity demanded by each individual

Answer 6

Market demand

Question 7

The law of demand posts an —— relationship between the quantity demanded of a good and it’s price, other things constant.

Answer 7

Inverse

Question 8

The law of —— applies when other things, such as income and the prices of all other goods and services, are held constant.

Answer 8

Demand

Question 9

The ——–curve is derived by summing the quantity demanded by individuals at each price. Graphically, we add the individual demand curves horizontally to derive the total, or market, demand curve.

Answer 9

Market demand

Question 10

We measure the ——– ——– in terms of time dimension and in ——- -quality terms.

Answer 10

Demand schedule……… Constant

Question 11

Shift to the left on a demand curve means?

Answer 11

Decrease in demand for a good or service

Question 12

Shift in demand curve to the right means ?

Answer 12

An increase in demand for a good or service

Question 13

Goods for which demand rises as income rises.

Answer 13

Normal good— most goods are normal goods

Question 14

Goods for which demand falls as income rises.

Answer 14

Inferior goods

Question 15

What happens to demand when a substitutes price increases?

Answer 15

It causes a change in demand in the same direction. Example: an increase in the price if butter will cause an increase in demand for margarine

Question 16

What happens to demand when a complement good price changes?

Answer 16

A change in the price of a product will cause a change in demand in the opposite direction for the other good. Example: computer decrease in price will see an increase in demand for printer. If decrease in price of computer will see an increase in demand for printer at any price

Question 17

What cause a shift or movement in the entire demand curve?

Answer 17

A change in determinant other than the good’s own price. A change in any if the ceteris pair us conditions causes the curve to shift.

Question 18

What causes a movement along the demand curve?

Answer 18

A change in price if the good is a movement along the curve. This changes the quantity demanded. Hence represents one spot on the actual curve

Question 19

There is normally an —- relationship between Price and quantity of a good supplied, other things held constant.

Answer 19

Direct

Question 20

The —– curve normally shows a direct relationship between price and quantity supplied.

Answer 20

Supply

Question 21

——–curve is obtained by horizontally adding individual supply curves in the market.

Answer 21

Market supply

Question 22

Movement along the supply curve occurs when…

Answer 22

There is a change in price. A change in price causes a change in quantity supplied this causes movement along the same supply curve from one point to another.

Question 23

If the price changes we ——— a curve- there is a change in quantity demanded if supplied.

Answer 23

Move along

Question 24

If some other determinant changes, we ——— a curve-there is a change in demand or supply.

Answer 24

Shift

Question 25

The ——— is drawn with other things held constant. If these ceteris pair us conditions of supply change, the supply curve will shift.

Answer 25

Supply curve

Question 26

The major ceter pair us conditions are:

Answer 26

Input prices, technology and productivity, taxes and subsidies, expectations of future prices, the number of firms in the industry

Question 27

A negative tax; a payment to a producer from the government, usually in the form of a cash grant per unit.

Answer 27

Subsidy

Question 28

The price that clears the market, at which quantity demanded equals quantity supplied; the price where the demand curve intersects the supply curve

Answer 28

Market clearing or equilibrium price

Question 29

The situation when quantity supplied equals quantity demanded at a particular price

Answer 29

Equilibrium

Question 30

The market clearing price occurs at the ————- of the market demand curve and the market supply curve.

Answer 30

Intersection

Question 31

——— price is also called the ——— price, the price from which their is no tendency to change unless there is a change in demand or supply

Answer 31

Market clearing price…. Equilibrium

Question 32

Whenever the price is———- than the equilibrium price, ther is an excess quantity supplied (surplus).

Answer 32

Greater

Question 33

Whenever the price is ——– than the equilibrium price, there is an excess quantity demanded (shortage).

Answer 33

Less