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Questions and Answers
All competitive markets involve which of the following? (Select all that apply)
All competitive markets involve which of the following? (Select all that apply)
The concept of demand can be summarized by a schedule or curve showing the quantity of a product that would be _____
The concept of demand can be summarized by a schedule or curve showing the quantity of a product that would be _____
consumed at various possible prices
A buyer's intentions or plans in regard to the purchase of a product is known as _____
A buyer's intentions or plans in regard to the purchase of a product is known as _____
demand
The inverse, or negative, relationship between price and quantity demanded is known as the law of ____
The inverse, or negative, relationship between price and quantity demanded is known as the law of ____
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The 'other-things-equal' assumption is important in the law of demand because _____
The 'other-things-equal' assumption is important in the law of demand because _____
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Which of the following are the characteristics of a competitive market? (Select all that apply)
Which of the following are the characteristics of a competitive market? (Select all that apply)
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The _____ is consistent with common sense because people ordinarily do buy more of a product at a lower price.
The _____ is consistent with common sense because people ordinarily do buy more of a product at a lower price.
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Which of the following specifically refers to demand?
Which of the following specifically refers to demand?
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Consumers will only buy additional units of a good if the price of the good is reduced is an example of _____
Consumers will only buy additional units of a good if the price of the good is reduced is an example of _____
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The price actually paid for a good is not reflected in the demand because demand is merely a statement of _____ buying the good.
The price actually paid for a good is not reflected in the demand because demand is merely a statement of _____ buying the good.
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Consumers experience _____ marginal utility the more they consume of a particular good or service.
Consumers experience _____ marginal utility the more they consume of a particular good or service.
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Which statement correctly describes the relationship between price and quantity demanded of a good or service?
Which statement correctly describes the relationship between price and quantity demanded of a good or service?
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The income effect indicates that a _____ price increases the purchasing power of income, enabling consumers to purchase ____ of a product and vice versa.
The income effect indicates that a _____ price increases the purchasing power of income, enabling consumers to purchase ____ of a product and vice versa.
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During the second quarter, the price of Jonah's burgers remains constant, but the price of Sam's burgers increases. Other things _____, the law of demand indicates that fewer Sam's burgers will be purchased than in the previous quarter.
During the second quarter, the price of Jonah's burgers remains constant, but the price of Sam's burgers increases. Other things _____, the law of demand indicates that fewer Sam's burgers will be purchased than in the previous quarter.
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Due to the substitution effect, buyers have an incentive to buy less expensive products in place of similar products that have become _____.
Due to the substitution effect, buyers have an incentive to buy less expensive products in place of similar products that have become _____.
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The law of demand is consistent with common sense because people ordinarily _____.
The law of demand is consistent with common sense because people ordinarily _____.
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The inverse relationship between price and quantity demanded can be graphically illustrated by ____.
The inverse relationship between price and quantity demanded can be graphically illustrated by ____.
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Diminishing marginal utility states that less satisfaction is derived from each successive unit yields _____, consumers will buy additional units only if the price of those units is progressively _____.
Diminishing marginal utility states that less satisfaction is derived from each successive unit yields _____, consumers will buy additional units only if the price of those units is progressively _____.
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Which of the following are determinants of demand? (Select all that apply)
Which of the following are determinants of demand? (Select all that apply)
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Diminishing marginal _____ states that, in any specific time period, buyers will derive less satisfaction from each additional unit of the product consumed.
Diminishing marginal _____ states that, in any specific time period, buyers will derive less satisfaction from each additional unit of the product consumed.
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A favorable change in consumer tastes and preferences for a product will ____ demand, shifting the demand curve to the _____.
A favorable change in consumer tastes and preferences for a product will ____ demand, shifting the demand curve to the _____.
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The law of demand can be supported by the income effect.
The law of demand can be supported by the income effect.
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Which are the reasons for changes in buyer tastes? (Select all that apply)
Which are the reasons for changes in buyer tastes? (Select all that apply)
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The _____ suggests that at lower prices, buyers have an incentive to substitute less expensive products for similar products that are now relatively more expensive.
The _____ suggests that at lower prices, buyers have an incentive to substitute less expensive products for similar products that are now relatively more expensive.
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A demand curve shows the ____.
A demand curve shows the ____.
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If the birthrate increases, the purchase of baby products is likely to ____.
If the birthrate increases, the purchase of baby products is likely to ____.
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Which of the following is likely to cause an increase in the demand for a good or service?
Which of the following is likely to cause an increase in the demand for a good or service?
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An unfavorable change in consumer tastes and preferences for a product will ____ demand, which is illustrated as a shift of the demand curve to the ____.
An unfavorable change in consumer tastes and preferences for a product will ____ demand, which is illustrated as a shift of the demand curve to the ____.
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Which of the following exemplifies a decrease in the demand for goods due to a decrease in the number of buyers? (Select all that apply)
Which of the following exemplifies a decrease in the demand for goods due to a decrease in the number of buyers? (Select all that apply)
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Which of the following exemplifies a change in buyers' tastes?
Which of the following exemplifies a change in buyers' tastes?
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A change in the number of buyers is a determinant of market ____.
A change in the number of buyers is a determinant of market ____.
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When a product’s demand varies directly with money income, it is considered a(n) ____ good.
When a product’s demand varies directly with money income, it is considered a(n) ____ good.
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In which of the following cases would the demand for a normal good likely increase? (Select all that apply)
In which of the following cases would the demand for a normal good likely increase? (Select all that apply)
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Which of the following affects the demand for normal goods and inferior goods?
Which of the following affects the demand for normal goods and inferior goods?
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An increase in consumer income is likely to increase the demand for a normal good.
An increase in consumer income is likely to increase the demand for a normal good.
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Which of the following types of goods affect the demand for another product due to a change in their price? (Select all that apply)
Which of the following types of goods affect the demand for another product due to a change in their price? (Select all that apply)
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When the price of one product rises, the demand for its substitute will increase.
When the price of one product rises, the demand for its substitute will increase.
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What are two goods called when a change in the price of one good has little or no effect on the demand for the other?
What are two goods called when a change in the price of one good has little or no effect on the demand for the other?
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Which of the following factors increase the demand for any good or service? (Select all that apply)
Which of the following factors increase the demand for any good or service? (Select all that apply)
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A ___ the demand curve represents a change in demand while a ____ the demand curve represents a change in the quantity demanded.
A ___ the demand curve represents a change in demand while a ____ the demand curve represents a change in the quantity demanded.
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The law of supply states that as price ____, the quantity supplied (Qs) rises; as price _____, the quantity supplied falls.
The law of supply states that as price ____, the quantity supplied (Qs) rises; as price _____, the quantity supplied falls.
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Other things equal, the fundamental characteristic of supply is _____.
Other things equal, the fundamental characteristic of supply is _____.
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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 period.
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 period.
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According to the law of supply, price and quantity supplied have a(n) _____ relationship.
According to the law of supply, price and quantity supplied have a(n) _____ relationship.
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Other things equal, firms will produce and offer for sale ____ of their product at a high price than at a low price.
Other things equal, firms will produce and offer for sale ____ of their product at a high price than at a low price.
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Which of the following has the greatest effect on the quantity supplied?
Which of the following has the greatest effect on the quantity supplied?
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In general, a firm will _____ the output of a good or service if the price of the good is rising.
In general, a firm will _____ the output of a good or service if the price of the good is rising.
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The supply curve is ____ sloping curve.
The supply curve is ____ sloping curve.
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When drawing a supply curve, ____ is labeled on the vertical axis.
When drawing a supply curve, ____ is labeled on the vertical axis.
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Which of the following are determinants of supply? (Select all that apply)
Which of the following are determinants of supply? (Select all that apply)
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Which of the following is the most important factor for a producer in determining how much of a product to produce?
Which of the following is the most important factor for a producer in determining how much of a product to produce?
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A change in one of the determinants of supply results in a movement along the supply curve.
A change in one of the determinants of supply results in a movement along the supply curve.
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The supply curve illustrates the relationship between _____
The supply curve illustrates the relationship between _____
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The supply curve measures quantity _____ on the horizontal axis and ____ on the vertical axis.
The supply curve measures quantity _____ on the horizontal axis and ____ on the vertical axis.
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The determinants of the supply of a good are any factors other than the product's _____ that cause the supply curve of the good to shift.
The determinants of the supply of a good are any factors other than the product's _____ that cause the supply curve of the good to shift.
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___ resource prices raise production costs and, assuming a fixed product price, _____ profits.
___ resource prices raise production costs and, assuming a fixed product price, _____ profits.
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The prices of the ____ used in the production process help determine the costs of production incurred by firms.
The prices of the ____ used in the production process help determine the costs of production incurred by firms.
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How do improvements in productive technology enable firms to produce more units of output?
How do improvements in productive technology enable firms to produce more units of output?
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Greater resource prices ____ the costs of production, thereby, ____ the incentive for firms to produce the good at each price.
Greater resource prices ____ the costs of production, thereby, ____ the incentive for firms to produce the good at each price.
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The _____ 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.
The _____ 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.
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Resource costs or changes in these costs to production are responsible for shifts in the supply curve.
Resource costs or changes in these costs to production are responsible for shifts in the supply curve.
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If the government subsidizes the production of a good, it in effect ____ the producers' costs and ____ supply.
If the government subsidizes the production of a good, it in effect ____ the producers' costs and ____ supply.
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In general, what goals does the improvement of production techniques help companies to achieve?
In general, what goals does the improvement of production techniques help companies to achieve?
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If the government of a country subsidizes the production of a good, it: (Select all that apply)
If the government of a country subsidizes the production of a good, it: (Select all that apply)
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An increase in business taxes causes a(n) ____ in supply and will ____ production costs.
An increase in business taxes causes a(n) ____ in supply and will ____ production costs.
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Government subsidies of the production of a good has the effect of ____.
Government subsidies of the production of a good has the effect of ____.
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Which of the following refers to government financial assistance for the production of a good which lowers producers' costs and increases supply?
Which of the following refers to government financial assistance for the production of a good which lowers producers' costs and increases supply?
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The determinant of supply dealing with alternative products that can be produced by firms is called ___.
The determinant of supply dealing with alternative products that can be produced by firms is called ___.
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Producer expectations refer to firms' expectations of ___ for a good or service that they produce.
Producer expectations refer to firms' expectations of ___ for a good or service that they produce.
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If producers expect lower prices for their goods or services in the future, they will ____ now, which is illustrated by a shift of the supply curve to the ____.
If producers expect lower prices for their goods or services in the future, they will ____ now, which is illustrated by a shift of the supply curve to the ____.
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Which of the following would result in a change in supply? (Select all that apply)
Which of the following would result in a change in supply? (Select all that apply)
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The number of sellers or competitors in a market is a determinant or shifter of the ___ curve.
The number of sellers or competitors in a market is a determinant or shifter of the ___ curve.
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As firms leave an industry, supply decreases. This is illustrated as a shift of the supply curve to the ____.
As firms leave an industry, supply decreases. This is illustrated as a shift of the supply curve to the ____.
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Which of the following will cause a change in supply and not quantity supplied? (Select all that apply)
Which of the following will cause a change in supply and not quantity supplied? (Select all that apply)
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Other things equal, which of the following is correct regarding increasing the number of sellers in an industry?
Other things equal, which of the following is correct regarding increasing the number of sellers in an industry?
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A _____ the supply curve represents a change in supply while a ___ the supply curve represents a change in the quantity supplied.
A _____ the supply curve represents a change in supply while a ___ the supply curve represents a change in the quantity supplied.
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The only factor that causes a movement along the supply curve is:
The only factor that causes a movement along the supply curve is:
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What determines market price and equilibrium output in a market?
What determines market price and equilibrium output in a market?
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A change in _____, rather than a change in the quantity supplied, means a change in the schedule or a shift of the supply curve.
A change in _____, rather than a change in the quantity supplied, means a change in the schedule or a shift of the supply curve.
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A change in ____ causes a movement along the supply curve.
A change in ____ causes a movement along the supply curve.
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The equilibrium price where the quantity demanded equals the quantity supplied is otherwise known as the ____-clearing price.
The equilibrium price where the quantity demanded equals the quantity supplied is otherwise known as the ____-clearing price.
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The interaction between buyers and sellers determines the equilibrium price and the ____ quantity.
The interaction between buyers and sellers determines the equilibrium price and the ____ quantity.
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The ____ output is the quantity at which quantity demanded equals quantity supplied in a competitive market.
The ____ output is the quantity at which quantity demanded equals quantity supplied in a competitive market.
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What is the price where the intentions of buyers and sellers match?
What is the price where the intentions of buyers and sellers match?
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The interaction between buyers and sellers, which determines the equilibrium ___ and ___, is illustrated by the intersection of the demand and supply curves.
The interaction between buyers and sellers, which determines the equilibrium ___ and ___, is illustrated by the intersection of the demand and supply curves.
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A surplus is also known as excess ____.
A surplus is also known as excess ____.
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A change in ___, rather than a change in quantity supplied, means a change in the schedule or a shift of the supply curve.
A change in ___, rather than a change in quantity supplied, means a change in the schedule or a shift of the supply curve.
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Equilibrium price in a market changes when there is a change in which of the following? (Select all that apply)
Equilibrium price in a market changes when there is a change in which of the following? (Select all that apply)
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A surplus is when quantity supplied exceeds quantity demanded.
A surplus is when quantity supplied exceeds quantity demanded.
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A shortage results from an excess of quantity ___.
A shortage results from an excess of quantity ___.
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The rationing function of prices refers to the ability of the competitive forces of supply and demand to establish a price at which ____.
The rationing function of prices refers to the ability of the competitive forces of supply and demand to establish a price at which ____.
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A change in ____ causes the supply curve of a product to shift leftward or rightward.
A change in ____ causes the supply curve of a product to shift leftward or rightward.
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The production of a good or service in the least costly way is known as ___ efficiency.
The production of a good or service in the least costly way is known as ___ efficiency.
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What does allocative efficiency refer to?
What does allocative efficiency refer to?
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____ benefit is the additional utility gained from consuming one more unit of a good or service.
____ benefit is the additional utility gained from consuming one more unit of a good or service.
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The ____ of a good or service by a producer essentially reflects the marginal cost of producing the good or service.
The ____ of a good or service by a producer essentially reflects the marginal cost of producing the good or service.
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Competition among corn producers forces them to use the best technology and right mix of productive resources; otherwise their costs will be too high relative to the market price and they will be unprofitable. This is best described as ____.
Competition among corn producers forces them to use the best technology and right mix of productive resources; otherwise their costs will be too high relative to the market price and they will be unprofitable. This is best described as ____.
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The demand by a consumer for a good or service essentially reflects the ___ of the good or service, based on the utility received.
The demand by a consumer for a good or service essentially reflects the ___ of the good or service, based on the utility received.
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A decrease in demand while holding supply constant results in ____.
A decrease in demand while holding supply constant results in ____.
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Which of the following refers to a particular apportionment or mix of goods and services most highly valued by society?
Which of the following refers to a particular apportionment or mix of goods and services most highly valued by society?
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Study Notes
Demand in Competitive Markets
- Competitive markets involve supply, demand, price, and quantity.
- Demand is represented by schedules or curves indicating quantities consumers are willing to buy at different prices.
- The law of demand illustrates the negative correlation between price and quantity demanded.
Characteristics of Demand
- Demand refers to consumers’ intentions to purchase products.
- Factors influencing demand include consumer income, number of buyers, prices of related goods, expectations, and tastes.
- Diminishing marginal utility explains that additional units of a good provide less satisfaction, influencing purchasing behavior based on price reductions.
Laws and Effects in Demand
- The "other-things-equal" assumption highlights that price isn't the sole factor in demand.
- The income effect demonstrates that lower prices increase purchasing power, thereby increasing demand.
- The substitution effect prompts consumers to replace expensive goods with cheaper alternatives.
Shifts in Demand
- A rightward shift indicates an increase in demand, while a leftward shift denotes a decrease.
- Changes in consumer tastes, number of buyers, and income levels can lead to shifts in the demand curve.
Supply in Competitive Markets
- Supply curves illustrate the positive relationship between price and quantity supplied; as prices rise, quantity supplied increases.
- Determinants of supply include technology, resource prices, taxes, subsidies, and the number of sellers in a market.
Laws and Effects in Supply
- Price is the most influential factor on quantity supplied.
- An increase in taxes typically reduces supply, while government subsidies increase supply by lowering production costs.
Market Equilibrium
- Market equilibrium occurs at the price where quantity demanded equals quantity supplied.
- Surpluses arise when quantity supplied exceeds quantity demanded; shortages occur when quantity demanded surpasses quantity supplied.
Efficiency in Production
- Productive efficiency refers to producing goods at the lowest possible cost.
- Allocative efficiency denotes the optimal mix of goods valued by society, ensuring resources are allocated where they are most effective.
Responses to Changes
- An increase in demand with constant supply raises equilibrium prices and quantities, while a decrease in demand results in lower prices and quantities.
- Expectations about future prices can influence current supply levels, as producers adjust based on anticipated market conditions.
Key Economic Concepts
- The marginal benefit reflects the additional satisfaction from consuming one more unit, guiding consumer choices.
- Price adjustments encourage firms to adopt efficient practices to remain profitable amid competitive pressures.
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Description
This quiz explores the fundamentals of demand within competitive markets. It covers key concepts including demand curves, the law of demand, and factors influencing consumer purchasing behavior. Test your understanding of how price affects demand and the implications of diminishing marginal utility.
