Chapter 3 - Supply & Demand

Question 0

A SCHEDULE showing how much of a good or service people will purchase at any price during a specified time period, other things constant

Answer 0

demand

Question 1

all of the arrangements that individuals have for exchanging with one another

Answer 1

market

Question 2

a negative, or inverse, relationship between the price of any good or service and the quantity demanded, holding other factors constant

Answer 2

law of deman (ceteris paribus)

Question 3

price of a commodity in terms of another commodity

Answer 3

relative price

Question 4

price we observe today in today’s dollars

Answer 4

money price

Question 5

graphical representation of the demand schedule

Answer 5

demand curve

Question 6

inferior goods

Answer 6

goods for which demand falls as income rises

Question 7

goods for which demand rises as income rises; most goods are these goods

Answer 7

normal goods

Question 8

two determinants of demand

Answer 8

income, tastes/preferences, prices of related goods

Question 9

two goods are substitutes when a change in the price of one causes a shift in demand for the other in the same direction as the price change

Answer 9

substitutes

Question 10

two goods are complements when a change in the price of one causes an opposite shift in the demand curve for the other

Answer 10

complements

Question 11

anything that can shift the demand curve

Answer 11

determinant

Question 12

schedule showing relationship between price and quantity supplied for a specified time period, other things being equal

Answer 12

supply

Question 13

amount of a product or service that firms are willing to sell at alternative prices

Answer 13

supply

Question 14

the higher the price of a good, the more of that good sellers will make available over a specified time period, other things being equal

Answer 14

law of supply

Question 15

at higher prices, a larger quantity will generally be supplied than at lower prices and vice versa

Answer 15

law of supply

Question 16

a graphical representation of the supply schedule

Answer 16

supply curve

Question 17

Two determinants of supply

Answer 17

cost of inputs, taxes/subsidies, technology/productivity, price expectations, number of firms in industry

Question 18

price that clears the market and at which quantity demanded equals quantity supplied

Answer 18

equilibrium price

Question 19

situation when quantity supplied equals quantity demanded at a particular price

Answer 19

equilibrium

Question 20

situation when quantity demanded is greater than quantity supplied

Answer 20

shortage

Question 21

shortages exist at any price blank the market clearing price

Answer 21

below

Question 22

the situation when quantity supplied is greater than quantity demanded

Answer 22

surplus

Question 23

surplus exists at any price blank the market clearing price

Answer 23

above