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Flashcards in Exam 1 Deck (65)
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1

The law of demand suggests a _____ relationship between price and ______.

Negative, Quantity demanded

2

Consumer surplus is the amount that consumers

are willing to pay for a good minus what they actually pay for it.

3

The supply curve shows the relationship between:

price and quantity supplied.

4

An increase in supply refers to a what kind of shift in the supply curve:

a rightward shift of the supply curve.

5

When the price of inputs increase, how does the supply curve respond.

the supply curve shifts up and to the left

6

A decrease in the opportunity cost of steel production will:

make suppliers more likely to produce steel, thus shifting the supply curve down and to the righ

7

An increase in demand shifts the demand curve:

to the right

8

If the demand for good A increases when the price of good B increases, then good A and good B are:

Substitutes

9

Consumer surplus on the graph

Above price line and below demand curve

10

Producer surplus on the graph

Below price line and above supply curve

11

Anonymity on the Internet has lowered the cost of rudely confronting people. What has happened to the supply of rude confrontations?

The supply has increased, shifting down and to the right

12

A decrease in demand shifts the demand curve

to the left

13

The quantity supplied:

is the amount that sellers are willing and able to sell at a particular price.

14

The law of supply reflects a _____ relationship between price and quantity ______

positive, supplied

15

An increase in a per unit production tax ______ supply.

decreases

16

Out of the following which does not shift demand?
-Population
-Price
-Expectations
-Income

Price

17

A decrease in the price of one substitute good causes the demand curve of the other good

To shift to the left

18

As the price of a good increases:

it becomes profitable to produce more of the good even with higher costs of production.

19

An increase in the future expected price of a storable good ________ supply.

Decreases

20

*** If market demand decreases (affect on equilibrium price and equilibrium quantity) ***

equilibrium price and quantity will both decrease.

21

*** If market supply increases: (affect on equilibrium price and equilibrium quantity) ***

equilibrium price will decrease but equilibrium quantity will increase.

22

When a market is competitive:

buyers compete with other buyers, raising prices, and sellers compete with sellers, lowering prices.

23

*** If market demand increases (affect on equilibrium price and equilibrium quantity) ***

an increase in both the equilibrium price and the equilibrium quantity

24

In the market for a normal good, an increase in income will cause an increase in ______, an increase in quantity ______, and a(n) ______ in price.

demand; supplied; increase

25

A decrease in supply causes the equilibrium price to ______ and equilibrium quantity to ______.

rise; fall

26

Which of the following events will cause a decrease in the equilibrium price?
-a government tax on output
-a decrease in income for an inferior good
-an increase in the price of a substitute good
-lower input prices

lower input prices

27

If demand decreases, ceteris paribus, market price will be ______ at the new equilibrium point.

lower

28

How did the spread of the Internet affect the market for news (regardless of source)?

Supply increased, causing the price to fall.

29

How did the spread of the Internet affect the market for newspapers?

Demand decreased, causing the price to fall.

30

When you move along a demand curve:

all non-price determinants of demand are held constant.