Economics Test 2 Test Questions – Flashcards
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competitive markets
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buyers and sellers have little market power ex: market of specific agricultural products, wheat for example, where there are many farmers who each produce a very small fraction of the total production of wheat and many buyers who each consume a tiny portion of that production. Because no single buyer or seller can affect the price of wheat the price is taken as given. At the market place buyers can buy all they want and sellers can sell all they want.
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the law of demand refers to the
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inverse relationship between the price of a good and the quantity demanded.
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In economics the demand for a good refers to the amount of the good people:
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will buy at various prices
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the demand schedule for a good:
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indicates the quantities that will be purchased at alternative market prices
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if the price of music downloads decreases which of the following is most likely to occur
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quantity demanded will increase
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if the price of tennis rackets were to increase we
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the demand for tennis balls to decrease
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inferior good
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used clothing
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whenever the price of Good A decreases the demand for Good B increases. Good A and B appear to be
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complements
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a change in which of the following variables does not cause a change in demand
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prices of unrelated goods
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each point on the demand curve shows the
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amount that people want to buy at that price
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the supply curve shows
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how the quantity produced varies with price
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the difference between a change in quantity supplied and a change in supply is that a change in
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quantity supplied is caused by a change in a goods own, current price, while a change in supply is caused by a change in some other variable such as input prices, prices of related goods, expectations or taxes
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which of the following would not shift the supply curve for swordfish
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an increase in the price of swordfish
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a supply schedule shows
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how many units producers are willing and able to sell a various prices
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an upward -sloping supply curve shows the
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suppliers are willing to increase production of their good if they receive higher prices for them
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a market supply schedule reflects the total quantity
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supplied at each price by all of the producers
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which of the following would be most likely to cause a reduction in the supply of Nintendo video games
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an increases in the price of computer chips used to make Nintendo games
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to an economist a decrease in supply means
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that for any given price the producer is now willing to produce and sell less. A decrease in supply is represented by a shift leftward of the whole curve
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if there is surplus____ will be frustrated by their inability to exchange at the current price and they will ___ the prices as a result
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sellers;lower
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ceteris paribus if the vacancy rate in an apartment complex increased from 5% to 20% over the past two years we would except to see
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the rent decrease leading to an increase in quantity demanded
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which of the following is the correct way to describe equilibrium in a market
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at equilibrium quantity demanded equals quantity supplied
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at the equilibrium price for gasoline
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everyone with the desire and he income to buy gasoline at that prices can do so. all sellers willing and able to sell gasoline at that price can do so .
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when there is an excess quantity supplied of a product at the current price then
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the market price must be above equilibrium price the market price will tend to fall
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interpret the following statement: "Demand exceeds the available quantity of apartment housing. if the price of apartment rentals were increased demand would decrease and an equilibrium could be achieved
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incorrect because it confuses "demanded" with "quantity demanded"
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when there is an excess quantity demanded of a product at the current price when
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the price will tend to rise
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which of the following would increase the quantity of LCD TVs demanded but would not increase the demand for LCD TVs
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a decrease in the current price of LCD TVs
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assume that coffee and tea are substitutes for each other. if weather conditions cause a substantial portion of the available coffee crop to be destroyed then most probably
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the demand for tea will increase
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a shortage currently exists in the market for strawberries. which of the following statements is correct?
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the quantity of strawberries demanded exceeds the quantity supplied and the market price is below the equilibrium price
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a steel mill raises the price of steel by 20% which results in a 7% reduction in the quantity of steel demanded. the demand curve facing this firm is:
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inelastic
