Micro Econ Quiz 4

Demand is the relationship between the price of a good and:
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Terms in this set (26)
Demand is the relationship between the price of a good and:
the quantity of the good consumers are willing and able to buy.
If the prices of all goods changed by the same percentage,
then there would be no change in the relative price of a good and no substitution effect.
According to the income effect, a drop in the price of a normal good:
increases the purchasing power of a consumer's income.
The market demand for a good shows _____________________.
the quantities of a good demanded per period by all consumers at various prices
As personal income increases, consumers are willing and able to buy more of a good at each price. This causes:
a rightward shift of the demand curve
As money income increases, consumers tend to substitute used furniture with new furniture. Used furniture is an example of a(n):
inferior good
A summer in Miami turned out to be warmer than usual, causing people to consume more cola. This can be represented by:
a rightward shift of the demand curve for cola
The law of supply states that the quantity supplied of a product is __________________________________.
directly related to the product price
The law of supply says that a _________________________________.
higher price will induce producers to supply a higher quantity to the market.
According to the law of supply, the ___________________________ of the good at that price are positively related, other things remaining constant.
price of a good and the quantity supplied
A higher price of a good _________________________.makes producers more able to increase the quantity supplied of that good.An increase in supply means that:producers are willing to sell more at each price.A decrease in the price of cocoa will most likely lead to:an increase in the supply of chocolateThe prices of resources employed to make a good __________________________.affect the cost of production and therefore the supply of the goodTransaction costs are the _______________ required for exchange.costs of time and informationStores locate together so that more shoppers will be drawn by the call of the mall. This is due to the force of the "______________".invisible handWhen a market is in equilibrium, _____.the quantity demanded is equal to the quantity suppliedWhen the demand curve for a good shifts rightward, the quantity demanded at the initial price exceeds the quantity supplied at that price. Competition among consumers for the limited quantity supplied puts upward pressure on the price. As the price increases, ________________________________, and the quantity supplied increases along the existing supply curve until the two quantities are equal once again at a new equilibrium point.the quantity demanded decreases along the new demand curveA decrease in the equilibrium price and an increase in the equilibrium quantity occurs when there is a:rightward shift of the supply curve, given a downward-sloping demand curveWhen both demand and supply curves shift rightward, equilibrium quantity increases. However, the change in equilibrium price depends on which curve shifts more. If the demand curve shifts more, ______________________. If the supply curve shifts more, then equilibrium price decreases.then equilibrium price increasesThe _____________ of any good is the amount of the good that buyers are willing and able to purchase at a given pricequantity demandeda _______________ shows the entire relationship between the price of a good and the quantity of the good demandeddemand curveA demand schedule is a TABLE that shows the entire relationship between the price of a good and the quantity of the good demandeddemand scheduleThe _______________ states that, other things being equal, the quantity demanded of a good falls when the price of the good rises. You can see the law of demand graphically in the downward-sloping demand curvelaw of demandchange in pricemovement alongeverything elseshift of