question

Substitution in production is a determinant of ____.

answer

supply

question

A price _____ is the maximum legal price a seller may charge for a product or service.

answer

ceiling

question

Consumer experience ____ marginal utility the more they consumer of a particular good or service.

answer

diminishing

question

From an economic perspective, what is true of a market?

answer

The pursuit of buyers and sellers in making themselves better off, it is a virtual and/or physical institution or space, and buyers and sellers interact in their desire to buy and sell a good or service.

question

A buyer's intentions or plans in regard to the purchase of a product is known as:

answer

demand.

question

What are determinants of supply?

answer

Taxes and subsidies, technology, and resource prices.

question

Price and quantity supplied have a ____ relationship.

answer

positive

question

A surge in demand while supply remains constant results in an _____ in both equilibrium price and quantity.

answer

increase

question

If costs of production rise, the producer has an incentive to produce _____ output.

answer

less

question

What describes the law of demand?

answer

All other things being equal, as price increases, quantity demanded decreases, and all other thing being equal, as price decreases, quantity demand increases.

question

Buyers and sellers are brought together in a ____.

answer

market

question

What does not exemplify an improvement in technology affecting supply?

answer

Increased subsidies to farmers for producing corn for its conversion to ethanol.

question

Producer expectations of future prices are a determinant of ___.

answer

supply

question

Equilibrium price is otherwise known as ___-___ ___.

answer

market-clearing price

question

Other things equal, firms will produce and offer for sale ____ of their product at a high price than at a low price.

answer

more

question

What type of goods affect the demand for a product due to a change in their price?

answer

Complementary goods and substitute goods.

question

A price ___ is a legally mandated price imposed above equilibrium price of the price that a free market would establish.

answer

floor

question

Example of a substitute.

answer

Pepsi and Coke.

question

What is a determinant of demand?

answer

Number of buyers, prices of related goods, consumer tastes, changes in income, consumer expectations.

question

The ___ of supply are any factors other than the product's ____ that have an effect on the supply of a good or service and cause the supply sure to shift.

answer

determinants, price

question

Quantity demanded is illustrated on the ____ axis, while price is illustrated on the _____ axis.

answer

Horizontal (x), vertical (y)

question

Market ____ is a schedule or curve showing the various amounts of a product that producers are willing and able to make available for sale at each possible price during a specific price.

answer

supply

question

The number of buyers is a determinant of market ___.

answer

demand

question

The supply curve measures quantity ___ on the horizontal axis and ____ on the vertical axis.

answer

supplied, price

question

And increase in business taxes causes a ____ in supply and will ___ production costs.

answer

decrease, increase

question

What would result in a change of supply?

answer

An increase in the excise tax on cigarettes, an increase in the number of shoe stores at the local mall, and an increase or decrease in the wage rate.

question

The number of sellers of competitors in a market is a determinant or shifter in the ___ curve.

answer

supply

question

The vast majority of goods that are not related to one another are called ___ goods.

answer

independent

question

A shortage results from an excess of quantity _____.

answer

demanded

question

An increase in supply while holding demand constant results in a ____ in equilibrium price, and an ____ in equilibrium quantity.

answer

decrease, increase

question

Government may place legal limits on price when it is determined that prices are unfairly ____ for buyers or unfairly ____ for sellers.

answer

high, low

question

A decrease in demand while holding supply constant results in:

answer

a decrease in both equilibrium price and quantity.

question

Products whose demand varies directly with changes in money or income are called normal or ___ goods.

answer

superior

question

Example of determinants of supply?

answer

Taxes and subsidies.

question

____ resource prices raise production costs and, assuming a fixed product price, ___ profits.

answer

Higher, reduce

question

The added cost of producing one more unit of output is called ____ cost.

answer

marginal

question

Products that have decreased demand when consumer incomes rise and increased demand when consumer incomes fall are called ____ ___.

answer

inferior goods.

question

A surplus is also known as an excess of ___.

answer

supply.

question

When the government provides financial assistance for the production of a good which lowers producers' costs and increases supply, it is called a ____.

answer

subsidy

question

The income effect is best described as ___ ____ increasing the purchasing power of income, enabling consumers to purchase ___ of a product and vice versa.

answer

lower prices, more

question

The interaction of buyers and sellers determines equilibrium price and equilibrium ____.

answer

quantity

question

Competition among corn producers forces them to use the best technology and right mix of productive resources; otherwise their costs will be too relative to the market price and they will be unprofitable. This is best described as:

answer

productive efficiency.

question

The number of sellers or competitors in a market is a determinant or shifter of the ___ curve.

answer

supply

question

What will cause a change in supply, not quantity supplied?

answer

Number of sellers, producer, technology.

question

The supply is an ____ sloping curve.

answer

upward

question

What illustrates the relationship between a good and its complement?

answer

When price of lettuce increases, the demand for salad dressing decreases. When the price of tuition decreases, the demand for textbooks increases.

question

An inverse relationship between two variable is a ___ relationship.

answer

negative

question

What consists of a large number of independently acting buyers and sellers?

answer

A competitive market.

question

The ____ of ____ incurred by firms when producing a good or service arise from the prices of the inputs that are used to produce said good or service.

answer

costs, production

question

What specifically refers to demand?

answer

The buyer side of any market.

question

What scenarios describe the appropriate effects on equilibrium price and quantity due to a decrease in supply while holding everything else constant?

answer

An oil spill causes several fishermen to leave the scrimp business and the equilibrium price of shrimp increases while quantity decreases. A fishing tax is placed on all shrimp and the equilibrium price of shrimp increases while quantity decreases.

question

Price and quantity have a ___ relationship.

answer

positive

question

Government-set prices cause:

answer

shortages, negative side effects, surpluses, and distortions in resource allocation, and environmental damage.

question

What refers to a particular apportionment of a mix of goods and services most highly valued by society?

answer

Allocative efficiency

question

A demand curve shows the plotted:

answer

inverse relationship between price and quantity demanded for a product.

question

One of the determinants of demand is ____ expectations.

answer

consumer

question

Examples of a market?

answer

Local gas station, NYSE, Craiglist, eBay.

question

What decreases demand?

answer

Falling incomes and the product is a normal good, an unfavorable change in consumer tastes, and a decrease in the price of a substitute good.

question

If a decrease in demand is greater that a decrease in supply, equilibrium price will ___.

answer

fall

question

The supply curve illustrates the relationship between:

answer

price and quantity supplied.

question

The concept of demand can be summarized by a schedule or curve showing the quantity of a product that would be:

answer

consumed at various possible prices.

question

If an increase in supply is larger than a decrease in demand, the equilibrium quantity will ____.

answer

increase

question

____ resource prices raise production costs and, assuming a fixed product price, ____ profits

answer

Higher, reduce

question

The demand by a consumer for a good or service essentially reflects the ____ benefit of the food or service, based on the utility received.

answer

marginal

question

What causes consumers to buy larger quantities of a product at each possible price?

answer

An increase in the number of buyers.

question

The fundamental characteristic of demand, other things equal, is that as the price falls, the quantity demand for a product ___.

answer

rises

question

A change in quantity demanded is caused by an increase or decrease in the ____ of the product under consideration and nothing else.

answer

price

question

What recalls the meaning of a change in supply?

answer

A change in the schedule and a shift of the curve.

question

____ refers to production of a product, whereas demand refers to the consumption of a product.

answer

Supply

question

______ benefit is the additional utility gained from consuming one more unit of a good or service.

answer

Marginal

question

The relationship between quantity supplied and price is :

answer

direct

question

relationship between quantity demanded and price is :

answer

inverse

question

price floors and ceiling prices:

answer

interfere with the rationing function of prices.

question

if two goods are complements:

answer

a decrease in the price of one will increase the demand for the other.

question

If there is a shortage of product, and the price is free to change:

answer

the price of the product will rise.

question

An economist for a bicycle company predicts that, other things equal, a rise in consumer incomes will increase the demand for bikes. This prediction assumes that:

answer

bikes are normal goods.

question

The income and substitution effects account for:

answer

the downward-sloping demand curve

question

The rationing function of prices refers to the:

answer

capacity of a competitive market to equalize quantity demanded and quantity supplied

question

What will not cause the demand for product K to change?

answer

A change in the price of product K

question

The upward slope of the supply curve reflects the:

answer

law of supply

question

At the equilibrium price:

answer

there are no pressure on price to either rise or fall

question

economists use the term "demand" to refer to:

answer

a schedule of various combinations of market prices and amounts/quantities demanded.

question

and improvement in production technology will:

answer

shift the supply curve to the right

question

the law of demand states that, other things equal:

answer

price and quantity demanded are inversely related.

Test #1 Microeconomics (ch. 3 only) – Flashcards

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