Topic 1

Question 1

An individual’s____ for a good or a service is measured as the amount of money he or she is willing to pay for it.

Answer 1

Value

Question 2

An individual’s value for a good or a service is measured as the amount of money he or she is_____

Answer 2

willing to pay for it.

Question 3

To “value” a good means that you ____

Answer 3

want it and can pay for it

Question 4

Formally, the difference between the agreed-on price and the seller’s value is called_____

Answer 4

Seller Surplus

Question 5

Formally, the difference between the___ and the___is called seller surplus.

Answer 5

agreed-on price

seller’s value

Question 6

______ is the buyer’s value minus the price.

Answer 6

Buyers Surplus

Question 7

Buyer surplus is the___ minus the___.

Answer 7

buyer’s value

Price

Question 8

If one person makes money, someone else must be losing out is known as____

Answer 8

zero-sum fallacy

Question 9

A_____ is a regulation that allows trade only at certain prices.

Answer 9

price control

Question 10

_____ is price controls that outlaw trade at prices above the ceiling.

Answer 10

Price Ceiling

Question 11

____is price controls that outlaw trade at prices below the floor.

Answer 11

Price Floors

Question 12

The_____consumers demand (purchase) more as price falls (i.e., demand curves slope downward), assuming other factors are held constant.

Answer 12

First law of demand

Question 13

To describe the buying behavior of a group of consumers, we add up all the individual demand curves to get an_____.

Answer 13

aggregate demand curve

Question 14

A demand curve for which quantity changes more than price is said to be____, or sensitive to price

Answer 14

Elastic

Question 15

A demand curve for which quantity changes less than price is said to be____, or insensitive to price.

Answer 15

Inelastic

Question 16

___ measures the change in demand arising from changes in income

Answer 16

income elasticity of demand

Question 17

What does positive elasicity means?

Answer 17

Income & Demand Increases

Question 18

What does negative elasicity means?

Answer 18

demand will decrease when price increases

Question 19

a good whose demand increases when price of another good increases.

Answer 19

Substitue

Question 20

Subsitute example?

Answer 20

Coca/Pepsoi

Question 21

a good whose demand increases when the price of another good decreases.

Answer 21

Complement

Question 22

Complement example?

Answer 22

Hamburger/Buns

Question 23

_____ is a simple two-step procedure that tells you whether a given price increase,

Answer 23

Stay-even analysis

Question 24

The change in quantity demanded in response to change in price is known as____?

Answer 24

Movement along the demand curve

Question 25

An_____ is something that affects demand that a company cannot control.

Answer 25

uncontrollable factor

Question 26

______a change in demand caused by any variable except price. If demand increases (shifts up and to the right), consumers demand larger quantities of the good at the same price. If demand decreases (shifts down and to the left), consumers demand lower quantities of the good at the same price. Shifts are caused by factors like advertising, changes in consumer tastes, and product quality changes.

Answer 26

Shift of he demand curve

Question 27

____ describe the behavior of a group of sellers and tell you how much will be sold at a given price.

Answer 27

Supply Curves

Question 28

A change in supply caused by any variable except price is known as?

Answer 28

Shift of the supply curve

Question 29

The market equilibrium is the price at which quantity supplied equals quantity demanded?

Answer 29

Market equilibrium