Micro Chapter 4 homework – Flashcards
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A market is always characterized by
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the presence of buyers and sellers
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A competitive market is a market in which
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no individual buyer or seller has any significant impact on the market price
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The highest form of competition is called
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perfect competition
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If a seller in a competitive market chooses to charge more than the market price, then
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buyers will tend to make purchases from other sellers
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Which of the following would not be a determinant of the demand for a particular good?
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the prices of the inputs used to produce the good
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Each of the following is a determinant of demand except
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technology
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If a good is normal, then an increase in income will result in
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an increase in the demand for the good
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Currently you purchase 6 packages of hot dogs a month. You will graduate from college in December and you will start a new job in January. You have no plans to purchase hot dogs in January. For you, hot dogs are
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an inferior good
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Economists in general
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do not try to explain people's tastes, but they do try to explain what happens when tastes change
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Suppose today people change their expectations about the future. This change in expectations
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can affect today's demand
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Which of the following demonstrates the law of demand?
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Dave buys more donuts at $0.25 per donut than at $0.50 per donut, other things equal
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A downward-sloping demand curve reflects
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law of demand
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The line that relates the price of a good to the quantity demanded of that good is called the
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demand curve, and it slopes downward as long as the good in question conforms to the law of demand
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It is apparent from the figure (4-1) that
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the demand for the good conforms to the law of demand
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Which of the following events could cause an increase in the supply of ceiling fans?
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The number of sellers of ceiling fans increases
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Other things equal, when the price of a good rises, the
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quantity supplied of the good increases
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If the price of a good is low,
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the quantity supplied of the good could be zero.
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A decrease in the number of sellers in the market causes
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the supply curve to shift to the left
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A movement along the supply curve might be caused by a change in
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the price of the good or service that is being supplied
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Suppose you make jewelry. If the price of gold falls, we would expect you to
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be willing and able to produce more jewelry than before at each possible price
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An advance in production technology will
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shift the supply curve to the right, but the demand curve will be unaffected
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An increase in the price of a good would
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increase producer surplus
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The movement from (figure 4-6) S to S1 could be caused by
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an improvement in technology
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Suppose the supply curves that are drawn represent supply curves for single-family residential houses. Then the movement from S to S1 could be
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a decrease in the price of lumber.
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Another term for equilibrium price is
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market-clearing price
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If, at the current price, there is a shortage of a good,
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the price is below the equilibrium price.
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In this market, equilibrium price and quantity, respectively, are (figure 4-8)
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$10 and 50 (where the two lines S&D intersect)
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If price in this market is currently $14, there would be a (figure 4-8)
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surplus of 40 units and the law of supply and demand predicts that the price will fall from $14 to a lower price.
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If there is currently a shortage of 30 units of the good, then (figure 4-8)
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the law of supply and demand predicts that the price will rise by $3 to eliminate the shortage.
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If the price were $8, a (figure 4-2)
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surplus of 25 units would exist and price would tend to fall
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If the price were $2, a (figure 4-2)
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shortage of 50 units would exist and price would tend to rise
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When the price of a good is higher than the equilibrium price,
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sellers desire to produce and sell more than buyers wish to purchase
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If excess demand exists in a market we know that the actual price is
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below equilibrium price and quantity demanded is greater than quantity supplied
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If goods A and B are complements, then an increase in the price of good A will result in
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less of good B being sold
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Suppose that a decrease in the price of good X results in fewer units of good Y being sold. This implies that X and Y are
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substitute goods
