Chapter 3

Question 1

Quantity demanded

Answer 1

The price of a good a consumer is willing to get

Question 2

Demand schedule

Answer 2

A table showing the relationship between the price and demand of a good

Question 3

Demand curve

Answer 3

A curve showing the relationship between the price and demand of a good

Question 4

Market demand

Answer 4

The demand of all consumers

Question 5

Law of demand

Answer 5

Price increase, quantity demand decrease; price decrease, quantity demand increase

Question 6

Normal

Answer 6

Demand increase, income increase

Question 7

Inferior

Answer 7

Demand increase, income decrease

Question 8

Substitue

Answer 8

goods that are used for the same purpose

Question 9

Complements

Answer 9

Goods that can be used together

Question 10

Income effect

Answer 10

Changing the price effects the consumers purchasing power

Question 11

Substitution effect

Answer 11

Change in price effects quantity demanded by making it more or less expensive than substitute goods

Question 12

Ceteris paribus

Answer 12

“All else equal” holding everything constant

Question 13

5 important economic variables that shifts demands

Answer 13

1) Income
2) Taste
3) Price of related goods
4) Expected future prices
5) Population

Question 14

Quantity supplied

Answer 14

amount of a good or service that a firm can supply

Question 15

Supply schedule

Answer 15

a table showing the relationship between the price and the quantity supplied

Question 16

Supply curve

Answer 16

a curve showing the relationship between the price and the quantity supplied

Question 17

Law of supply

Answer 17

Price increase, quantity supplied increase; price decrease, quantity supplied decrease

Question 18

5 important economic variables that shift supply

Answer 18

1) price of outputs
2) technological change
3) price of related goods in production
4) expected future prices
5) number of firms in the market

Question 19

Technological change

Answer 19

A firm can produce output with given quantity and that can be negative or positive

Question 20

Market equilibrium

Answer 20

When quantity supplied and quantity demand meet

Question 21

Competitive market equilibrium

Answer 21

In a market there are many buyers and sellers

Question 22

Surplus

Answer 22

When quantity supplied is greater than quantity demanded - price above the equilibrium

Question 23

Shortage

Answer 23

When quantity demanded is greater than quantity supplied - price below the equilibrium