Podcast
Questions and Answers
Graphically, the market demand curve is:
Graphically, the market demand curve is:
Assuming conventional supply and demand curves, changes in the determinants of supply and demand will:
Assuming conventional supply and demand curves, changes in the determinants of supply and demand will:
One can say with certainty that equilibrium price will decline when supply:
One can say with certainty that equilibrium price will decline when supply:
Other things equal, which of the following might shift the demand curve for gasoline to the left?
Other things equal, which of the following might shift the demand curve for gasoline to the left?
Signup and view all the answers
Because of unseasonably cold weather, the supply of oranges has substantially decreased. This statement indicates that:
Because of unseasonably cold weather, the supply of oranges has substantially decreased. This statement indicates that:
Signup and view all the answers
In the past few years, the demand for donuts has greatly increased. This increase in demand might best be explained by:
In the past few years, the demand for donuts has greatly increased. This increase in demand might best be explained by:
Signup and view all the answers
Which of the following statements is correct?
Which of the following statements is correct?
Signup and view all the answers
If X is a normal good, a rise in money income will shift the:
If X is a normal good, a rise in money income will shift the:
Signup and view all the answers
A decrease in the demand for recreational fishing boats might be caused by an increase in the:
A decrease in the demand for recreational fishing boats might be caused by an increase in the:
Signup and view all the answers
The demand curve for a product might shift as the result of a change in:
The demand curve for a product might shift as the result of a change in:
Signup and view all the answers
A government subsidy to the producers of a product:
A government subsidy to the producers of a product:
Signup and view all the answers
The law of supply indicates that:
The law of supply indicates that:
Signup and view all the answers
The upward slope of the supply curve reflects the:
The upward slope of the supply curve reflects the:
Signup and view all the answers
A market is in equilibrium:
A market is in equilibrium:
Signup and view all the answers
There will be a surplus of a product when:
There will be a surplus of a product when:
Signup and view all the answers
If we say that a price is too high to clear the market, we mean that:
If we say that a price is too high to clear the market, we mean that:
Signup and view all the answers
When the price of oil declines significantly, the price of gasoline also declines. The latter occurs because of a(n):
When the price of oil declines significantly, the price of gasoline also declines. The latter occurs because of a(n):
Signup and view all the answers
Assume in a competitive market that price is initially above the equilibrium level. We can predict that price will:
Assume in a competitive market that price is initially above the equilibrium level. We can predict that price will:
Signup and view all the answers
With a downsloping demand curve and an upsloping supply curve for a product, an increase in consumer income will:
With a downsloping demand curve and an upsloping supply curve for a product, an increase in consumer income will:
Signup and view all the answers
If L and M are complementary goods, an increase in the price of L will result in:
If L and M are complementary goods, an increase in the price of L will result in:
Signup and view all the answers
At the current price there is a shortage of a product. We would expect price to:
At the current price there is a shortage of a product. We would expect price to:
Signup and view all the answers
Markets explained on the basis of supply and demand:
Markets explained on the basis of supply and demand:
Signup and view all the answers
The rationing function of prices refers to the:
The rationing function of prices refers to the:
Signup and view all the answers
Assume product A is an input in the production of product B. In turn, product B is a complement to product C. We can expect a decrease in the price of A to:
Assume product A is an input in the production of product B. In turn, product B is a complement to product C. We can expect a decrease in the price of A to:
Signup and view all the answers
An increase in the excise tax on cigarettes raises the price of cigarettes by shifting the:
An increase in the excise tax on cigarettes raises the price of cigarettes by shifting the:
Signup and view all the answers
An increase in product price will cause:
An increase in product price will cause:
Signup and view all the answers
When an economist says that the demand for a product has increased, this means that:
When an economist says that the demand for a product has increased, this means that:
Signup and view all the answers
In constructing a stable demand curve for product X:
In constructing a stable demand curve for product X:
Signup and view all the answers
By an increase in demand we mean that:
By an increase in demand we mean that:
Signup and view all the answers
In moving along a stable supply curve which of the following is not held constant?
In moving along a stable supply curve which of the following is not held constant?
Signup and view all the answers
The location of the supply curve of a product depends on:
The location of the supply curve of a product depends on:
Signup and view all the answers
Allocative efficiency involves determining:
Allocative efficiency involves determining:
Signup and view all the answers
At the point where the demand and supply curves intersect:
At the point where the demand and supply curves intersect:
Signup and view all the answers
Digital cameras and memory cards are:
Digital cameras and memory cards are:
Signup and view all the answers
Which of the following would not shift the demand curve for beef?
Which of the following would not shift the demand curve for beef?
Signup and view all the answers
Suppose that in each of four successive years producers sell more of their product and at lower prices. This could be explained:
Suppose that in each of four successive years producers sell more of their product and at lower prices. This could be explained:
Signup and view all the answers
The income and substitution effects account for:
The income and substitution effects account for:
Signup and view all the answers
Other things equal, if the price of a key resource used to produce product X falls, the:
Other things equal, if the price of a key resource used to produce product X falls, the:
Signup and view all the answers
The demand curve shows the relationship between:
The demand curve shows the relationship between:
Signup and view all the answers
The law of demand states that:
The law of demand states that:
Signup and view all the answers
With a downsloping demand curve and an upsloping supply curve for a product, placing an excise tax on this product will:
With a downsloping demand curve and an upsloping supply curve for a product, placing an excise tax on this product will:
Signup and view all the answers
When product prices change, consumers are inclined to purchase larger amounts of the now cheaper products and less of the now more expensive products. This describes:
When product prices change, consumers are inclined to purchase larger amounts of the now cheaper products and less of the now more expensive products. This describes:
Signup and view all the answers
Increasing marginal cost of production explains:
Increasing marginal cost of production explains:
Signup and view all the answers
Steve went to his favorite hamburger restaurant with $3, expecting to buy a $2 hamburger and a $1 soda. When he arrived he discovered that hamburgers were on sale for $1, so Steve bought two hamburgers and a soda. Steve's response to the decrease in the price of hamburgers is best explained by:
Steve went to his favorite hamburger restaurant with $3, expecting to buy a $2 hamburger and a $1 soda. When he arrived he discovered that hamburgers were on sale for $1, so Steve bought two hamburgers and a soda. Steve's response to the decrease in the price of hamburgers is best explained by:
Signup and view all the answers
A product market is in equilibrium:
A product market is in equilibrium:
Signup and view all the answers
At the equilibrium price:
At the equilibrium price:
Signup and view all the answers
An increase in the price of a product will reduce the amount of it purchased because:
An increase in the price of a product will reduce the amount of it purchased because:
Signup and view all the answers
Allocative efficiency is concerned with:
Allocative efficiency is concerned with:
Signup and view all the answers
Suppose that in 2007 Ford sold 500,000 Mustangs at an average price of $18,800 per car; in 2008, 600,000 Mustangs were sold at an average price of $19,500 per car. These statements:
Suppose that in 2007 Ford sold 500,000 Mustangs at an average price of $18,800 per car; in 2008, 600,000 Mustangs were sold at an average price of $19,500 per car. These statements:
Signup and view all the answers
If a product is in surplus supply, its price:
If a product is in surplus supply, its price:
Signup and view all the answers
Study Notes
Market Demand and Supply
- Market demand curve is the horizontal sum of individual demand curves.
- Changes in supply and demand determinants likely alter equilibrium price and quantity.
- Equilibrium price declines with an increase in supply when demand decreases.
Demand Shifts
- Demand for gasoline shifts left due to the development of low-cost electric automobiles.
- A decrease in the supply of oranges indicates a decline in available quantities at various prices.
- Increased demand for donuts may be explained by changes in buyer tastes.
Supply and Demand Interactions
- If demand increases and supply decreases, equilibrium price will rise.
- A rise in money income shifts the demand curve for normal goods to the right.
- An increase in the price of outboard motors can decrease the demand for recreational fishing boats.
Understanding Market Equilibrium
- Equilibrium occurs when the amount producers want to sell equals what consumers want to buy.
- A surplus occurs when quantity supplied exceeds quantity demanded; prices tend to adjust upward.
- A shortage signals that quantity demanded exceeds quantity supplied; prices are expected to increase.
Price Effects
- A significant decline in oil prices typically leads to lower gasoline prices due to increased supply.
- When prices are above the equilibrium, we expect price to decrease while quantity demanded increases.
- An increase in excise tax on a product shifts the supply curve for that product leftward.
Elasticity of Supply and Demand
- Movements along the supply curve do not hold certain factors constant, such as the price of the product.
- The rationing function ensures that quantity demanded matches quantity supplied in a competitive market.
Costs and Production
- The upward slope of the supply curve reflects the law of supply: higher prices encourage more production.
- Allocative efficiency determines the output mix that maximizes society's satisfaction.
- Increasing marginal costs explain why supply curves are upsloping.
Consumer Behavior and Choices
- The substitution effect occurs when consumers opt for less expensive products as prices change.
- An increase in consumer income can elevate both equilibrium price and quantity for normal goods.
- In response to decreasing prices, demand often increases as consumers are more willing to purchase.
Complementary and Substitute Goods
- Digital cameras and memory cards are complementary goods; changes in one affect the other.
- Changes in the price of complementary goods can inversely impact the sales of related products.
Summary of Market Concepts
- A product market is in equilibrium when both supply and demand curves intersect.
- At equilibrium price, there are no pressures causing prices to rise or fall.
- Allocative efficiency ensures that resources are utilized effectively to produce goods that society desires most.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
These flashcards cover key concepts from Chapter 3 of the Economics curriculum, focusing on demand and supply curves. Test your understanding of market dynamics and the effects of changes in supply and demand determinants.
