Questions and Answers
All competitive markets involve which of the following? (Select all that apply)
Which side of the market is specifically referred to as demand?
The buyer side
What kind of relationship does the law of demand describe?
Negative
A demand curve shows the ______.
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Which of the following are determinants of demand? (Select all that apply)
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Which of the following are the characteristics of a competitive market? (Select all that apply)
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The concept of demand can be summarized by a schedule or curve showing the quantity of a product that would be ______.
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According to the law of demand, which of the following statements are true, all other things being equal? (Select all that apply)
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The inverse relationship between price and quantity demanded can be graphically illustrated by ______.
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A favorable change in consumer tastes and preferences for a product will _______ demand, shifting the demand curve to the ________.
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All the following are the determinants of demand except ______.
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What is likely to cause an increase in the demand for a good or service?
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Which of the following is a determinant of demand?
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Which of the following would likely increase the demand for a normal good? (Select all that apply)
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The price of ______ goods is a determinant of demand.
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A change in the number of buyers is a determinant of market ______.
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The vast majority of goods that are not related to one another are called ______ goods.
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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)
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One of the determinants of demand is ______ expectations.
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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.
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In the marketplace, what is a good that is used together with another good?
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Which factor has the greatest effect on the quantity supplied?
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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?
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The price of ______ goods is a determinant of demand.
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According to the law of supply, what kind of relationship do price and quantity supplied have?
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The supply curve measures quantity ______ on the horizontal axis and ______ on the vertical axis.
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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.
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Which of the following are determinants of supply? (Select all that apply)
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True or false: Resource costs or changes in the costs of production are responsible for shifts of the supply curve.
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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 illustrates the relationship between ______.
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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.
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When drawing a supply curve, _____ is labeled 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.
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What determines market price and equilibrium output in a market?
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If costs of production rise, the producer has an incentive to produce ______ output.
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The equilibrium price where the quantity demanded equals the quantity supplied is otherwise known as the __________.
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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.
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The ability of the competitive forces of supply and demand to establish a price at which selling and buying decisions are consistent is called ______.
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What is the price where the intentions of buyers and sellers match?
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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 ______.
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Choose all of the following that will cause a change in supply, not quantity supplied.
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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 ______.
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The interaction between buyers and sellers determines the equilibrium price and the _______ quantity.
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A decrease in demand while holding supply constant results in ______ in both equilibrium price and quantity.
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The equilibrium price where the quantity demanded equals the quantity supplied is otherwise known as the ________ price.
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A decrease in supply while holding demand constant results in a(n) ______ in equilibrium price, and a(n) ______ in equilibrium quantity.
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The production of a good or service in the least costly way is known as ______ efficiency.
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A decrease in equilibrium price and indeterminate result on equilibrium quantity is a result of which of the following?
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In which of the following situations do governments intervene to prevent prices from rising above or falling below their equilibrium levels? (Select all that apply)
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A price _____ is the maximum legal price a seller may charge for a product or service.
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Price controls or ______ mandated in the apartment rental market benefit the consumer by establishing a price ______ the free market equilibrium price.
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Which of the following in the rental market for housing benefits renters, but makes it unprofitable for suppliers or landowners?
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A price at or above the price floor is illegal.
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The effects on equilibrium price and quantity due to an increase in supply and a simultaneous decrease in demand are shown by ______.
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Study Notes
Competitive Markets and Demand
- Competitive markets include price, supply, demand, and quantity.
- Demand refers to the buyer side of a market, showcasing consumer interest in a product.
- Law of demand indicates an inverse relationship between price and quantity demanded: if price decreases, quantity demanded increases, and vice versa.
- Demand curves graphically represent this inverse relationship, typically sloping downward.
Determinants of Demand
- Key determinants of demand include:
- Prices of related goods (substitutes and complements)
- Number of buyers in the market
- Consumer income and tastes
- Consumer expectations about future prices and availability
- An increase in consumer preferences for a product shifts the demand curve to the right, indicating increased demand.
Supply Fundamentals
- Supply is affected by price, with a direct relationship: as price rises, quantity supplied increases.
- Supply curves illustrate the relationship between price and quantity supplied, typically sloping upward.
- Determinants of supply encompass factors like technology, resource prices, taxes, and producer expectations.
- Shifts in supply curves indicate changes in overall supply, while movements along the curve indicate changes in quantity supplied.
Market Equilibrium
- Market equilibrium occurs when quantity demanded equals quantity supplied, also known as the market clearing price.
- Changes in demand and supply influence equilibrium price and quantity; for instance, a decrease in demand leads to lower equilibrium price and quantity.
- An increase in supply alongside a decrease in demand results in a lower equilibrium price, with an indeterminate effect on quantity.
Price Controls
- Governments may implement price ceilings to prevent prices from being too high for consumers, creating healthcare or housing market interventions.
- Price floors are legal minimum prices set to ensure producers receive adequate compensation.
- Price controls can disrupt market efficiency; high ceilings can lead to shortages while low floors can result in surpluses.
Additional Concepts
- Complementary goods are products used together, while substitute goods can replace one another in use.
- Independent goods have little to no effect on each other’s demand changes.
- Productive efficiency is achieved when goods are produced at the lowest possible cost, maximizing economic efficiency.
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Description
Test your knowledge of key concepts in Microeconomics Chapter 3 with these flashcards. They cover essential terms such as price, supply, demand, and the law of demand. Enhance your understanding of how competitive markets function through interactive learning.
