63 terms

Macroeconomics Chapter 3 Exam Review

STUDY
PLAY

Terms in this set (...)

Which of the following correctly states the effects on equilibrium price and quantity due to an increase in demand, while holding everything else constant?
3-D televisions become popular and the equilibrium price and quantity of 3-D televisions increase
__________ in demand while holding supply constant __________ equilibrium price and __________ equilibrium quantity.
An increase; raises; raises
__________ in supply while holding demand constant __________ equilibrium price and __________ equilibrium quantity.
An increase; lowers; raises
Which of the following scenarios describe the appropriate effects on equilibrium price and quantity due to a decrease in supply while holding everything else constant?
A fishing tax is placed on all shrimp and the equilibrium price of shrimp increases while quantity decreases; an oil spill causes several fishermen to leave the shrimp business and the equilibrium price of shrimp increases while quantity decreases
The effects on equilibrium price and quantity due to an increase in supply and a simultaneous decrease in demand are shown by:
a decrease in price and an indeterminate change in quantity
A decrease in equilibrium price and indeterminate result on equilibrium quantity is a result of which of the following?
An increase in supply and a simultaneous and proportional decrease in demand
Which of the following causes consumers to buy larger quantities of a product at each possible price?
An increase in the number of buyers
For most, but not all products, a rise in __________ causes and increase in demand
income
Which of the following correctly state the effects on equilibrium price and quantity due to an increase in demand, while holding everything else constant?
Consumers expect the price of shrimp to increase in the future, therefore the equilibrium price and quantity increase now; the price of Coke increases, therefore the equilibrium price and quantity of Pepsi increase, 3-D televisions become popular, therefore the equilibrium price and quantity increase
If the supply of corn increases, holding demand constant, the equilibrium price of corn will __________ and the quantity will __________.
decrease; increase
Which of the following describe the effects on equilibrium price and equilibrium quantity as a result of a simultaneous and proportional increase in supply and decrease in demand?
Price falls and the change in equilibrium quantity is indeterminate
The law of demand describes an __________ relationship between the price of a good or service and the quantity demanded of that good or service
inverse
An __________ in demand while holding supply constant results in an increase in both equilibrium price and quantity.
increase
Which of the following are determinants of demand?
Prices of related goods, consumer expectations, consumer tastes, number of buyers, changes in income
A vast majority of goods unrelated to one another are called __________ goods.
independent
Which of the following types of goods affect the demand for another product due to a change in their price?
Complementary goods, substitute goods
__________ in supply while holding demand constant results in an increase in equilibrium price, but a decrease in equilibrium quantity.
A decrease, a leftward shift
An increase in __________ while holding __________ constant results in a decrease in equilibrium price, but an increase in equilibrium quantity
supply; demand
A demand curve measures quantity __________ on the horizontal axis and __________ on the vertical axis.
demanded; price
A __________ the demand curve represents a change in demand while a __________ the demand curve represents a change in the quantity demanded.
shift of; movement along
The number of buyers is a determinant of market __________.
demand
What are the characteristics of a competitive market?
A large number of buyers and sellers acting independently, buying and selling standardized products
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:
productive efficiency
Which of the following describe the law of demand?
All other things being equal, as price increases, quantity demanded decreases, all other things being equal, as prices decreases, quantity demanded increases
From an economic perspective, which of the following are true of a market?
In a market, buyers and sellers interact in their desire to buy and sell a good or service, a market is a virtual and/or physical institution or space, in a market the pursuit of buyers and sellers in making themselves better off
Producer expectations of future prices are a determinant of __________
supply
The interaction between buyers and sellers determines equilibrium price and equilibrium __________.
quantity
Products that have decreased demand when consumer incomes rise and increased demand when consumer incomes fall are called __________ goods.
inferior
Which of the following refers to a particular apportionment or mix of goods and services most highly valued by society?
Allocative efficiency
Which of the following specifically refers to demand?
The buyer side of any market
The __________ of supply of a good are any factors other than the product's __________ that cause the supply curve of the good to shift
determinants; price
A price __________ is a minimum price fixed by the government, generally imposed above the price, which is otherwise known as the equilibrium price.
floor
Which of the following are determinants of supply?
Taxes and subsidies, prices of other goods, expected prices
A decrease in demand while holding supply constant results in __________ in both equilibrium price and quantity.
a decline
Under what circumstances would government intervene and prevent prices from rising or falling to their equilibrium levels?
Prices are too low for firms, prices are too high for consumers
Which of the following illustrates the relationship between a good and its complement?
When the price of tuition decreases, the demand for textbooks increases; When the price of lettuce increases, the demand for salad dressing decreases
__________ bring together buyers and sellers.
Markets
According to the law of supply, price and quantity supplies have a __________ relationship.
positive
Which of the following does not exemplify an improvement in technology affecting supply?
Increased subsidies to farmers for producing more corn.
An increase in business taxes causes __________ in supply and will __________ production costs.
a decrease; increase
The supply curve measures quantity __________ on the horizontal axis and __________ on the vertical axis.
supplied; price
A shortage results from an excess of quantity __________.
demanded
Which of the following are examples of a market?
A local gas station, a pay-to-play online gaming site, ebay, the NYSE
If costs of production rise, the producer has an incentive to produce __________ output.
less
Which of the following has the greatest effect on the quantity supplied that the producers are willing and able to supply?
Price
__________ resource prices raise production costs and, assuming a fixed product price, __________ profits.
Higher; reduce
Consumers experience __________ marginal utility the more they consume of a particular good or service.
diminishing
The price of __________ used in the production process help determine the costs of production incurred by firms.
resources
Market __________ is a schedule or curve showing the various amounts of a product that producers are willing and bale to make available for sale at each possible price during a specific period.
supply
Equilibrium price and quantity in a market changes when there is a change in:
supply, consumer tastes, demand
Which of the following refers to government financial assistance for the production of a good which lowers producers' costs and increases supply?
A subsidy
The price actually paid for a good is not reflected in the demand because demand is merely:
a statement of buyers' intentions regarding buying the good
Equilibrium price is otherwise known as market-__________ price.
clearing
The law of supply states that as price __________, the quantity supplied (Qs) rises; as price __________, the quantity supplied falls.
rises; falls
The income effect indicates that a __________ price increases the purchases power of income, enabling customers to purchase __________ of a product and vice versa.
lower; more
A change in demand occurs due to a change in a consumer's state of mind about purchasing a product that is based on something other than the __________ of the product
price
A surplus is also known as an excess of __________.
supply
If a decrease in demand is greater than a decrease in supply, equilibrium price will __________.
decrease
Government-set prices cause:
surpluses, distortions in resource allocation, shortages, negative side effects
The determinants of demand, other things equal, are assumed to be __________ when a demand curve is drawn or computed
constant
A buyer's intentions or plans in regard to the purchase of a product is known as:
demand
Equilibrium price and quantity in a market changes when there is a change in:
demand, consumer tastes, supply
Which of the following recalls the meaning of a change in supply?
A change in the schedule and a shift of the curve