Supply and Demand Test

Question 1

Demand

Answer 1

the willingness and ability to pay for a good or service. Perspective of consumer

Question 2

law of demand

Answer 2

as price decreases, quantity demanded increases, and as price increases, the quantity of demand decreases

Question 3

demand schedule

Answer 3

a table that lists the quantity of a good all consumers in a market will buy at each different price

Question 4

market demand schedule

Answer 4

a table that lists the quantity of a good all consumers in a market will buy at each different price

Question 5

shifts in demand

Answer 5

the shift in overall demand is shown when the whole line moves.

Question 6

What determines demand?

Answer 6

T- Tastes and preferences (+ advertisment)
I - Income of buyer
R- Related goods price (complements- two goods used together; substitutes- used in place of one another)
E- expectations of consumers (expected price change)
S- size of population

Question 7

Elasticity of demand

Answer 7

how much a change in price affects a change in quantity demanded

Question 8

elastic vs inelastic

Answer 8

a small change in price —>large change in quantity demanded vs large change in price—> small change in quantity demanded

Question 9

How is elasticity demanded

Answer 9

1. inelastic- necessities; elastic- luxuries
2. inelastic- no substitutes; elastic- substitutes
3. income- is it relatively inexpensive for you or no?

Question 10

supply

Answer 10

the amount of goods available

Question 11

law of supply

Answer 11

tendency of suppliers to offer more goods at a higher price. (when price goes down, the quantity supplied goes down; when price goes up, the quantity supplied goes up)

Question 12

cost of production

Answer 12

how to know how much to produce (takes in factors of making sure they can pay bills, labor, materials, etc)

Question 13

supply schedule

Answer 13

relationship between price and quantity supplied

Question 14

market supply schedule

Answer 14

chart that lists how much of a good all suppliers will offer at different prices

Question 15

market supply curve

Answer 15

graph of the data

Question 16

Changes in supply factors

Answer 16

S- subsidies and taxes by government 
T- technology 
O- order by government, government regulations 
R- resource costs
E- expected future prices
S- size of market

Question 17

elasticity of supply

Answer 17

measure of the way suppliers respond to a change in price. (inelastic- products that are difficult to produce; elastic- easy to produce)

Question 18

Marginal product of labor

Answer 18

change in output from hiring one additional unit of labor

Question 19

increasing marginal return

Answer 19

level of production In which the marginal product of labor increases as the number of workers increases

Question 20

diminishing marginal return

Answer 20

a level of production in which the marginal product of labor decreases as the number of workers increases

Question 21

fixed costs

Answer 21

cost that does not change in production

Question 22

total cost

Answer 22

fixed cost + variable costs

Question 23

variable costs

Answer 23

costs that rise or fall depending on quantity produced

Question 24

marginal cost

Answer 24

cost of producing one or more unit of a good

Question 25

marginal revenue

Answer 25

market price

Question 26

total revenue

Answer 26

(price x quantity)

Question 27

profit

Answer 27

(total revenue- total cost)

Question 28

excess supply

Answer 28

when quantity supplied is more than quantity demanded

Question 29

excess demand

Answer 29

when quantity demanded is more than quantity supplied

Question 30

shift in equilibrium- increase in supply

Answer 30

if a surplus occurs, producers reduce prices to sell their products. This creates a new market equilibrium (Q up + P down)

Question 31

shift in equilibrium- decrease in supply

Answer 31

as supply decreases, producers will raise prices and demand will decrease (Q down + P up)

Question 32

shift in equilibrium- increase in demand

Answer 32

more people want it than available, so price increases (Q up, P up_

Question 33

shift in equilibrium-fall in demand

Answer 33

when demand falls, suppliers respond bu cutting prices, creating a lower market price and a lower quantity sold (Q down + P down)

Question 34

Price ceiling

Answer 34

the maximum price that can be legally charged for a good

Question 35

Price floor

Answer 35

the minimum price that can be legally charged for a good

Question 36

remember to look at the graphssss

Answer 36

do it