Macro Chapter 3

Question 1

ceteris paribus

Answer 1

A latin term “all other things are constant”, assuming everything is equal.

Question 2

Complements

Answer 2

two goods that joint together during consumption.

Question 3

Consumer Surplus

Answer 3

The difference between the maximum price a buyer is willing and able to pay for a good or service and the price actually paid.

Question 4

Deadweight Loss

Answer 4

A loss of economic efficiency when the equilibrium is not achieved

Question 5

Demand

Answer 5

The willings and ability for consumers to buy a certain good or service

Question 6

Equalibrum

Answer 6

Where the supply and demand curve meet

Question 7

Equilibrium Price

Answer 7

The price where the supply and demand curve meet

Question 8

Equilibrium Quantity

Answer 8

the quantity in which the supply and demand curve meet

Question 9

Excess Demand

Answer 9

the leftover demand

Question 10

Excess Supply

Answer 10

the leftover supply

Question 11

Inferior Good

Answer 11

when you make more money and don’t have to buy McDonnell’s anymore. Mcodnalds is the inferior good

Question 12

Price Ceiling

Answer 12

When the government puts a max price on a good or service

Question 13

Substitute

Answer 13

two goods that can be used for the same purpose

Question 14

Surplus

Answer 14

The amount left over after a certain requirement has been achieved

Question 15

Why do economists use the ceteris paribus assumption?

Answer 15

So they can designate what they believe to be correct about two variables

Question 16

Tarrif

Answer 16

Tax on imported goods

Question 17

Tarrif

Answer 17

Tax on imported goods

Question 18

What is the relationship between total surplus and

economic efficiency?

Answer 18

when total surplus is maximized, the economy experience economic efficiency. Total surplus gets maximized when both consumer and producer is maximum.

Question 19

What is the relationship between total surplus and

economic efficiency?

Answer 19

when total surplus is maximized, the economy experience economic efficiency. Total surplus gets maximized when both consumer and producer is maximum.

Question 20

Consumer, total, producer surplus

Answer 20

Producer: the extra benefit producers receive from selling a good or service, measured by the price the
producer actually received minus the price the producer would have been willing to accept
Consumer:he extra benefit consumers receive from buying a good or service, measured by what the individuals would have been willing to pay minus the amount that they actually paid
Total: The sum of consumer and producer

Question 21

What is the relationship between total surplus and

economic efficiency?

Answer 21

When total surplus is maximized, the economy experience economic efficiency. Total surplus gets maximized when both consumer and producer is maximum.