Chapter 4

Question 1

_____, and _____ determine both the quantity of each good produced and the price at which each good is sold.

Answer 1

Supply and Demand

Question 2

Market

Answer 2

Group of buyers and sellers of a particular good or service.

Question 3

Competitive Market

Answer 3

Market in which there are many buyers and sellers so each has a negligible impact on the market.

Question 4

Characteristics of a Competitive Market

Answer 4

-The goods offered for sale are exactly the same
-The buyers and sellers are son numerous that none buyer or seller can influence the price.

Question 5

If a market is competitive, sellers are ___________ because they can’t influence price

Answer 5

Price-takers

Question 6

If a market has only one seller the market is known as _____

Answer 6

Monopoly

Question 7

Quantity Demanded

Answer 7

Amount of a good that buyers are willing and are able to purchase.

Question 8

Law of Demand

Answer 8

Other things being equal, and increase in the price of a good reduces the quantity demanded. While a decrease in the price, increases the quantity demanded of a good.

Question 9

Demand Schedule

Answer 9

Table that shows the relationship between price of a good and the quantity demanded.

Question 10

Demand Curve

Answer 10

Graph that shows the relationship with the price on the vertical axis and the quantity demanded on the horizontal axis. Slopes Downward.

Question 11

Market Demand Curve

Answer 11

Sum of the quantities demanded by for each individual buyer at each price.

Question 12

Shifts in the demand curve

Answer 12

• If buyers increase quantity demanded at each price goes right
• If buyers decrease quantity demanded at each price goes left

Question 13

Factors that shift demand curve

Answer 13

-Income
-Prices of related goods
-Tastes
-Expectations
-Number of buyers

Question 14

Normal Good

Answer 14

Increase in income leads to an increase in demand

Question 15

Inferior good

Answer 15

Increase in income leads to a decrease in demand

Question 16

Substitute Goods

Answer 16

If 2 goods can be used as the other.

Question 17

Complement Goods

Answer 17

If 2 goods are used together.

Question 18

Quantity Supplied

Answer 18

Amount of a good that sellers are willing and able to sell

Question 19

Law of supply

Answer 19

Other things being equal, an increase in price of a good increase the quantity supplied of the good, And a decrease in the price exceeds the quantity supplied.

Question 20

Supply Scheduled

Answer 20

Table that shows the relationship between the price of a good and the quantity supplied

Question 21

Supply curve

Answer 21

Graph of the relationship with the price in the vertical axis and quantity on the horizontal.

Question 22

Supply Curve

Answer 22

Graph of the relationship between price of a good and the quantity supplied.

Question 23

Market supply curve

Answer 23

Sum of the quantity supplied for each individual supply curve. Total quantity supplied of a good at each price.

Question 24

Shifts in the supply curve

Answer 24

-If the producers increase the quantity supplied at each price, shifts right
-If the producers decrease the quantity supplied, shifts left.

Question 25

Factors for the Supply Curve

Answer 25

-Input prices
-Technology
-Expectactions
-Number of sellers

Question 26

Equilibrium

Answer 26

Intersection of supply and demand. Price that balances the quantity demanded and quantity supplied. Markets move towards it.

Question 27

Shortage

Answer 27

Not enough supply

Question 28

Surplus

Answer 28

Over suppply

Question 29

Prices are _______ that guide the allocation of scarce resources.

Answer 29

Signals

Question 30

If both supply and demand shift is __________

Answer 30

Ambiguous.