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Questions and Answers
What does a movement from one point to another on a fixed curve represent?
What does a movement from one point to another on a fixed curve represent?
A movement from one point to another on a fixed curve.
The fundamental characteristic of demand, other things equal, is that as price falls, the quantity demanded for a product ____________.
The fundamental characteristic of demand, other things equal, is that as price falls, the quantity demanded for a product ____________.
Rises
The _________ curve shows the seller's minimum acceptable price at each unit of the product.
The _________ curve shows the seller's minimum acceptable price at each unit of the product.
Supply
Improvements in technology are a determinant of __________.
Improvements in technology are a determinant of __________.
An increase in the sales, property or any other tax will __________ production costs and __________ supply.
An increase in the sales, property or any other tax will __________ production costs and __________ supply.
Quantity demanded is illustrated on the _________ axis, while price is illustrated on the _________ axis.
Quantity demanded is illustrated on the _________ axis, while price is illustrated on the _________ axis.
__________ refers to the production of a product, whereas demand refers to the buyers who consume the product.
__________ refers to the production of a product, whereas demand refers to the buyers who consume the product.
The market demand curve is the __________ of all ________ demand curves for a good or service.
The market demand curve is the __________ of all ________ demand curves for a good or service.
What is likely to increase product demand?
What is likely to increase product demand?
A change in demand occurs due to a change in the consumer's mind about purchasing a product that is based on something other than the _________ of the product.
A change in demand occurs due to a change in the consumer's mind about purchasing a product that is based on something other than the _________ of the product.
For many people, Coke and Pepsi are substitutes.
For many people, Coke and Pepsi are substitutes.
A change in quantity supplied is caused by an increase or decrease in the ________ of the product under consideration and nothing else.
A change in quantity supplied is caused by an increase or decrease in the ________ of the product under consideration and nothing else.
How can the inverse relationship between price and quantity demanded be graphically illustrated?
How can the inverse relationship between price and quantity demanded be graphically illustrated?
An increase in the price of Coke will change the __________ for Coke while an increase in the price of Pepsi will change the _________ for Coke.
An increase in the price of Coke will change the __________ for Coke while an increase in the price of Pepsi will change the _________ for Coke.
The determinants of demand, other things equal, are assumed to be constant when a demand curve is drawn or computed.
The determinants of demand, other things equal, are assumed to be constant when a demand curve is drawn or computed.
Diminishing marginal utility states that less satisfaction is derived from each successive unit of a product consumed. Therefore, the law of demand is upheld because, as 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 of a product consumed. Therefore, the law of demand is upheld because, as each successive unit yields __________, consumers will buy additional units only if the price of those units is progressively __________.
Other things equal, the fundamental characteristic of the law of ________ is that as the price falls, the quantity supplied of a product falls.
Other things equal, the fundamental characteristic of the law of ________ is that as the price falls, the quantity supplied of a product falls.
We obtain the market supply curve by 'vertically adding' the supply curves of the individual producers.
We obtain the market supply curve by 'vertically adding' the supply curves of the individual producers.
A change in supply is represented by a movement along the curve, not a shift of the curve.
A change in supply is represented by a movement along the curve, not a shift of the curve.
The law of _________ is illustrated by a downward-sloping curve.
The law of _________ is illustrated by a downward-sloping curve.
Which of the following is likely to cause an increase in the demand for a good or service? (Select one)
Which of the following is likely to cause an increase in the demand for a good or service? (Select one)
On the supply and demand model, quantity demanded is illustrated on the vertical axis, while price is illustrated on the horizontal axis.
On the supply and demand model, quantity demanded is illustrated on the vertical axis, while price is illustrated on the horizontal axis.
A change in quantity demanded is caused by an increase or decrease in the _______________ of the product under consideration and nothing else.
A change in quantity demanded is caused by an increase or decrease in the _______________ of the product under consideration and nothing else.
Both land and labor would be bought and sold in the ________ market.
Both land and labor would be bought and sold in the ________ market.
The ongoing supply of a good or service by a producer essentially reflects the _________ of producing the good or service.
The ongoing supply of a good or service by a producer essentially reflects the _________ of producing the good or service.
Which pair exemplifies complementary goods? (Select one)
Which pair exemplifies complementary goods? (Select one)
Why is the 'other-things-equal' assumption important to the law of demand?
Why is the 'other-things-equal' assumption important to the law of demand?
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.
Which of the following are the key components of the market system? (Select all that apply)
Which of the following are the key components of the market system? (Select all that apply)
Producer expectations of future prices are a determinant of ___________
Producer expectations of future prices are a determinant of ___________
Buyers and sellers are brought together in a __________.
Buyers and sellers are brought together in a __________.
When two variables are being examined, and one variable moves one way and the other variable moves in the opposite direction, this is called a(n):
When two variables are being examined, and one variable moves one way and the other variable moves in the opposite direction, this is called a(n):
Which of the following types of goods affect the demand for a product due to a change in their price? (Select all that apply)
Which of the following types of goods affect the demand for a product due to a change in their price? (Select all that apply)
Consumer expectations are a determinant of supply.
Consumer expectations are a determinant of supply.
The number of sellers or competitors in a market is a determinant of _________
The number of sellers or competitors in a market is a determinant of _________
Which of the following are determinants of demand? (Select all that apply)
Which of the following are determinants of demand? (Select all that apply)
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 curve to shift.
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 curve to shift.
All of the following exemplify an improvement in technology affecting supply, except:
All of the following exemplify an improvement in technology affecting supply, except:
On the supply and demand model, quantity demanded is illustrated on the vertical axis, while price is illustrated on the horizontal axis.
On the supply and demand model, quantity demanded is illustrated on the vertical axis, while price is illustrated on the horizontal axis.
Which of the following describes the law of demand? (Select all that apply)
Which of the following describes the law of demand? (Select all that apply)
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.
The added cost of producing one more unit of output is called _______ cost.
The added cost of producing one more unit of output is called _______ cost.
Which of the following are determinants of supply? (Select all that apply)
Which of the following are determinants of supply? (Select all that apply)
The number of buyers in a market is a determinant of demand.
The number of buyers in a market is a determinant of demand.
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?
If costs of production rise, the producer has an incentive to produce _______ output at every possible cost.
If costs of production rise, the producer has an incentive to produce _______ output at every possible cost.
Which of the following are reasons for the inverse relationship between price and quantity demanded? (Select all that apply)
Which of the following are reasons for the inverse relationship between price and quantity demanded? (Select all that apply)
Price and quantity supplied have a _________ relationship.
Price and quantity supplied have a _________ relationship.
The law of supply states that as price ________, the quantity supplied rises; as price _________, the quantity falls.
The law of supply states that as price ________, the quantity supplied rises; as price _________, the quantity falls.
The supply curve illustrates the relationship between:
The supply curve illustrates the relationship between:
Which of the following are determinants of supply? (Select all that apply)
Which of the following are determinants of supply? (Select all that apply)
Which of the following are components of the circular flow model? (Select all that apply)
Which of the following are components of the circular flow model? (Select all that apply)
A _____________ is an institution or mechanism that brings buyers and sellers into contact.
A _____________ is an institution or mechanism that brings buyers and sellers into contact.
Products whose demand varies directly with changes in money or income are called normal or ________ goods.
Products whose demand varies directly with changes in money or income are called normal or ________ goods.
Which of the following refers to demand?
Which of the following refers to demand?
A vast majority of goods unrelated to one another are called independent goods.
A vast majority of goods unrelated to one another are called independent goods.
The law of demand describes an ________ relationship between the price of a good or service and the quantity demanded of that good or service.
The law of demand describes an ________ relationship between the price of a good or service and the quantity demanded of that good or service.
A demand curve shows the plotted:
A demand curve shows the plotted:
On a supply curve, _______ is labeled on the vertical axis.
On a supply curve, _______ is labeled on the vertical axis.
The prices of factor inputs used in the production process help determine the costs of production incurred by firms.
The prices of factor inputs used in the production process help determine the costs of production incurred by firms.
Which of the following decrease demand? (Select all that apply)
Which of the following decrease demand? (Select all that apply)
Which of the following are substitutes? (Select all that apply)
Which of the following are substitutes? (Select all that apply)
When the price of one product rises, the demand for its substitute will ___________.
When the price of one product rises, the demand for its substitute will ___________.
From an economic perspective, which of the following are true of a market? (Select all that apply)
From an economic perspective, which of the following are true of a market? (Select all that apply)
_______ factor prices raise production costs and, assuming a fixed product price, _______ profits.
_______ factor prices raise production costs and, assuming a fixed product price, _______ profits.
Funds that businesses pay for resources are costs to businesses, but they represent which of the following types of flows to households? (Select all that apply)
Funds that businesses pay for resources are costs to businesses, but they represent which of the following types of flows to households? (Select all that apply)
The two parties involved in a circular flow model are:
The two parties involved in a circular flow model are:
Products that have decreased demand when consumer incomes rise and increased demand when consumer incomes fall are called _________ goods.
Products that have decreased demand when consumer incomes rise and increased demand when consumer incomes fall are called _________ goods.
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:
Which of the following are examples of a market? (Select all that apply)
Which of the following are examples of a market? (Select all that apply)
Other things equal, as a buyer's income rises, the willingness and ability to buy a normal product ___________.
Other things equal, as a buyer's income rises, the willingness and ability to buy a normal product ___________.
A complementary good is one that is used in place for another good.
A complementary good is one that is used in place for another good.
A demand ____________ organizes the relationship between price and quantity in a tabular format, whereas the demand ____________ is a graphical representation of this relationship.
A demand ____________ organizes the relationship between price and quantity in a tabular format, whereas the demand ____________ is a graphical representation of this relationship.
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:
Which of the following consists of a large number of independently acting buyers and sellers?
Which of the following consists of a large number of independently acting buyers and sellers?
In general, a rise in income causes a(n) ___________ in demand for most products and a fall in income causes a(n) ____________ in demand for most products, other things equal.
In general, a rise in income causes a(n) ___________ in demand for most products and a fall in income causes a(n) ____________ in demand for most products, other things equal.
If the price of hot dogs increases, the demand for hot dog buns will __________.
If the price of hot dogs increases, the demand for hot dog buns will __________.
Other things equal, the fundamental characteristic of supply is:
Other things equal, the fundamental characteristic of supply is:
Which of the following are resources which businesses purchase from households? (Select all that apply)
Which of the following are resources which businesses purchase from households? (Select all that apply)
Which of the following illustrates the relationship between a good and its complement? (Select all that apply)
Which of the following illustrates the relationship between a good and its complement? (Select all that apply)
Which of the following statements does not exhibit any type of relationship? (Select all that apply)
Which of the following statements does not exhibit any type of relationship? (Select all that apply)
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)
Choose all of the following that will cause a change in supply rather than a change in quantity supplied. (Select all that apply)
Choose all of the following that will cause a change in supply rather than a change in quantity supplied. (Select all that apply)
Changes in determinants of demand will cause a movement along the demand curve.
Changes in determinants of demand will cause a movement along the demand curve.
A change in quantity demanded is caused by an increase or decrease in the ___________ of the product under consideration and nothing else.
A change in quantity demanded is caused by an increase or decrease in the ___________ of the product under consideration and nothing else.
Changes in _________ about the future price of a product may affect the producer's current willingness to __________ that product.
Changes in _________ about the future price of a product may affect the producer's current willingness to __________ that product.
As firms leave an industry, supply decreases, illustrated as a shift of the supply curve to the __________.
As firms leave an industry, supply decreases, illustrated as a shift of the supply curve to the __________.
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.
Other things equal, the amount of a product that will be purchased at various possible prices is shown by:
Other things equal, the amount of a product that will be purchased at various possible prices is shown by:
As with labor, plant and ___________ used in the production of one good, can be used in the production of alternative goods.
As with labor, plant and ___________ used in the production of one good, can be used in the production of alternative goods.
The law of ________ is illustrated by a downward-sloping curve.
The law of ________ is illustrated by a downward-sloping curve.
Which of the following would most likely lead to a decrease in demand? (Select all that apply)
Which of the following would most likely lead to a decrease in demand? (Select all that apply)
The function of businesses in the circular flow model is to ________ resources and ___________ products.
The function of businesses in the circular flow model is to ________ resources and ___________ products.
In the circular flow model, households _________ resources and ________ products.
In the circular flow model, households _________ resources and ________ products.
Which of the following summarize the determinants of supply and their net effect on the supply curve? (Select all that apply)
Which of the following summarize the determinants of supply and their net effect on the supply curve? (Select all that apply)
A normal good is an item for which demand _________ when income rises and __________ when income falls.
A normal good is an item for which demand _________ when income rises and __________ when income falls.
If prices for a good or service are expected to increase in the future, demand for that good or service will __________ today. If prices are expected to decrease in the future, demand will _______ today.
If prices for a good or service are expected to increase in the future, demand for that good or service will __________ today. If prices are expected to decrease in the future, demand will _______ today.
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.
A favorable change in consumer tastes and preferences for a product will _________ demand, illustrated as a shift of the demand curve to the _________.
A favorable change in consumer tastes and preferences for a product will _________ demand, illustrated as a shift of the demand curve to the _________.
There is a(n) _________ relationship between the price of a good or service and the quantity demanded for that good or service.
There is a(n) _________ relationship between the price of a good or service and the quantity demanded for that good or service.
Flashcards
Marginal Utility
Marginal Utility
The satisfaction a consumer experiences from consuming one additional unit of a good.
Diminishing Marginal Utility
Diminishing Marginal Utility
The tendency for marginal utility to decrease as consumption of a good increases.
Law of Demand
Law of Demand
The inverse relationship between the price of a good and the quantity demanded.
Market
Market
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Supply
Supply
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Supply Determinant
Supply Determinant
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Producer Expectations
Producer Expectations
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Demand
Demand
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Demand Determinant
Demand Determinant
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Normal Good
Normal Good
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Inferior Good
Inferior Good
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Inverse Relationship
Inverse Relationship
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Direct Relationship
Direct Relationship
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Movement Along the Supply Curve
Movement Along the Supply Curve
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Shift in the Supply Curve
Shift in the Supply Curve
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Law of Supply
Law of Supply
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Circular Flow Model
Circular Flow Model
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Market Demand Curve
Market Demand Curve
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Complementary Goods
Complementary Goods
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Substitute Goods
Substitute Goods
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Subsidies
Subsidies
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Demand Shift to the Right
Demand Shift to the Right
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Market Dynamics
Market Dynamics
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Market Equilibrium
Market Equilibrium
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Price Ceiling
Price Ceiling
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Price Floor
Price Floor
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Shift in the Demand Curve
Shift in the Demand Curve
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Economics
Economics
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Opportunity Cost
Opportunity Cost
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Scarcity
Scarcity
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Study Notes
Marginal Utility and Market Behavior
- Consumers experience diminishing marginal utility as consumption of a good increases, meaning satisfaction decreases with each additional unit consumed.
- The relationship between price and demand is inverse; as price increases, quantity demanded decreases, and vice versa.
Market System Components
- Key components of the market system include prices and markets; government, capital, and investment play lesser direct roles.
- Buyers and sellers interact in a market, which can be physical or virtual, allowing for the exchange of goods.
Supply Determinants
- Producer expectations regarding future prices heavily influence supply decisions.
- The number of sellers in a market also affects supply dynamics.
- Important determinants of supply include technology, resource prices, and taxes/subsidies; these factors can shift the supply curve.
Demand Determinants
- Key determinants of demand include consumer tastes, expectations, number of buyers, prices of related goods, and changes in income.
- Normal goods see increased demand as consumer income rises, while inferior goods see a decrease in demand as income increases.
Relationships in Economics
- An inverse relationship is noted when one variable moves in the opposite direction of another, commonly observed between price and quantity demanded/supplied.
- A direct relationship exists between price and quantity supplied; higher prices incentivize higher supply.
Market Dynamics
- A shift in the supply curve indicates a change in supply, whereas movement along the curve indicates a change in quantity supplied due to price changes.
- The law of supply states that as price increases, quantity supplied rises, and as price decreases, quantity supplied falls.
Circular Flow Model
- The model consists of households and businesses interacting in resource and product markets.
- Households sell resources and buy products, while businesses purchase resources and sell products.
Price Expectations and Demand
- If future prices of a good are expected to rise, current demand will increase; if prices are expected to fall, current demand will decrease.
- The market demand curve represents the sum of individual demand curves for a good or service.
Complementary and Substitute Goods
- Complementary goods are products that are used together, such as hot dogs and hot dog buns; if the price of one rises, demand for the complement may fall.
- Substitute goods are those that can replace one another; for example, an increase in Coke's price may increase the demand for Pepsi.
Taxes and Costs
- Government intervention through subsidies can lower production costs and increase supply; conversely, increased taxes can raise costs and decrease supply.
- The relationship between resource prices and production costs is direct; higher resource prices lead to higher production costs.
Demand and Supply Curves
- Demand and supply curves illustrate the relationships among price, quantity, and market behavior; they provide insights into consumer and producer responses to market changes.
- A demand shift to the right indicates increased demand at all prices, often due to favorable changes in consumer preferences or an increase in buyers.
Conclusion
- Understanding these fundamental concepts is critical to analyzing economic interactions in markets. Changes in consumer behaviors, external market shifts, and internal economic conditions continuously shape both supply and demand dynamics.
Studying That Suits You
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Description
Test your understanding of key concepts from Chapter 4 of Macroeconomics with these flashcards. Explore important terms like diminishing marginal utility, market components, and supply determinants. Perfect for students looking to reinforce their knowledge in macroeconomic principles.
