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Econ Ch. 3
Terms in this set (25)
The goal of the consumer in a market economy is to use his or her limited income to buy
The set of goods and services that maximizes the consumer's total utility.
People benefit by participating in the market because
Market participation allows individuals to specialize and, with trade, ultimately consume more.
Which of the following is a market transaction?
A college student purchases a laptop computer.
Which of the following is purchased in a product market?
Cell phone service.
Which of the following is purchased in a factor market?
The labor of a state university professor.
A buyer is said to have a demand for a good only when
The buyer is both willing and able to purchase the good.
Ceteris paribus, if the opportunity cost of purchasing a good rises, then the maximum price a particular consumer is willing to pay for that good
Does not change since the demand curve does not change.
Ceteris paribus, if the price of a digital camera rises, then we can expect
A decrease in the quantity demanded of digital cameras.
Ceteris paribus, which of the following is most likely to cause an increase in the quantity demanded of perfume?
A decrease in the price of perfume.
Ceteris paribus, which of the following would you expect to have no effect on the demand curve for new automobiles?
An increase in the price of new automobiles.
If bagels and doughnuts are substitutes, then a decrease in the price of doughnuts will result in
A decrease in the demand for bagels.
A change in demand means there has been a shift in the demand curve, and a change in quantity demanded
Means that price has changed and there is movement along the demand curve.
To calculate market demand, we
Add the quantities demanded for each individual demand schedule horizontally.
A change in the price of a good
Results in a change in quantity supplied.
The law of supply implies that
Supply curves are upward-sloping to the right.
Which of the following would not cause the market supply of cell phones to change?
A reduction in the demand for cell phones causes the price to fall.
The equilibrium price in a market is found where
The market supply curve intersects the market demand curve.
If there is a shortage at a given price, then
That price is less than the equilibrium price.
If the quantity demanded of a good is greater than the quantity supplied of the good at the current price, then
Price will increase until it reaches the equilibrium price.
Assume milk is used to produce ice cream. Ceteris paribus, a decrease in the price of milk will cause the equilibrium price of ice cream to
Decrease and the equilibrium quantity of ice cream to increase.
Suppose both the demand for and supply of salsa increase (although not necessarily by the same amount). What can we conclude about changes in the price and quantity of salsa?
The quantity increases but the change in the price cannot be determined.
Suppose a hurricane hits Florida, causing widespread damage to houses and businesses. The governor of Florida places price ceilings on all building materials to keep the prices reasonable. Which of the following is the most likely result?
Shortages of building materials and a slower recovery from the storm.
The In the News article titled "Seafood Prices Rise after BP Oil Spill" suggests that seafood prices increased because of a decrease in supply. When the availability of seafood worsens, the supply curve of seafood shifts to the left, causing
The price of seafood to move up along the market demand curve.
If corn products are found to cause cancer, then the
Demand curve for corn will shift left.
If a price is above equilibrium
A surplus will cause the price to fall and the quantity supplied to decrease.
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