Marcroeconomics chapter 3

5 Written Questions

1. maximum price that can be charged for goods and services, set by the government.
2. a table that shows the relationship between the price of a good and the quantity supplied
3. a graph of the relationship between the price of a good and the quantity demanded
4. the price that balances quantity supplied and quantity demanded
5. the change in consumption resulting from a change in real income

5 Matching Questions

1. normal goods
2. change in quantity demanded
3. equilibrium quantity
4. substitution effect
5. supply curve

1. a Goods for which demand goes up when income is higher and for which demand goes down when income is lower.
2. b the quantity supplied and the quantity demanded at the equilibrium price
3. c a graph of the relationship between the price of a good and the quantity supplied
4. d when consumers react to an increase in a good's price by consuming less of that good and more of other goods
5. e a movement along the demand curve that occurs in response to a change in price

5 Multiple Choice Questions

1. excess
   1. supply curve
   2. shortage
   3. supply
   4. surplus
2. consumers buy more of a good when its price decreases and less when its price increases
   1. law of supply
   2. demand
   3. price celling
   4. law of demand
3. Tendency of suppliers to offer more of a good at a higher price
   1. change in supply
   2. law of demand
   3. supply
   4. law of supply
4. goods that are used together with others, usually demanded together. Price of one good goes up, demand for other goes down (gas/motor oil, tuition/textbooks)
   1. complementary goods
   2. normal goods
   3. inferior good
   4. substitute good
5. goods that can be used to replace the purchase of similar goods when prices rise
   1. substitution effect
   2. substitute good
   3. inferior good
   4. normal goods

5 True/False Questions

1. price floor → floor below which prices are not allowed to fall

   True        False

2. diminishing marginal utility → the principle that our additional satisfaction, or our marginal utility, tends to go down as more and more units are consumed

   True        False

3. demand schedule → a table that shows the relationship between the price of a good and the quantity demanded

   True        False

4. shortage → excess

   True        False

5. inferior good → a good for which, other things equal, an increase in income leads to a decrease in demand

   True        False