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50 Multiple choice questions

  1. the price that balances quantity supplied and quantity demadned
    market clearing price
    at this price everyone in market has been satisfied
    actions of buyers and sellers naturally move markets towards equilibrium of supply and demand
  2. market price is below equilibrium price
    demanders are unable to buy all they want at the going price
    excess demand
    quantity demanded is greater than quantity supplied
    sellers can respond by raisin their prices without losing sales
    price increases decreased quantity demanded and quantity supplied increase
  3. 1. input prices
    2. technology
    3. expectations
    4. number of sellers
  4. the amount of good that buyers are willing and able to purchase
    price of good determines quantity demanded
  5. determines how much of the good buyers choose to consume and how much sellers choose to produce
  6. describes market in which there are so many buyers and sellers that each has negligible impact on market price
    EX: each seller of ice cream has limited control over the price because other sellers are offering similar products, a seller has little reason to change less than going price and if he charges more buyers will make their purchases elsewhere, no single buyer of ice cream can inflence the price of ice cream because each buyer purchases only small amount
  7. a situation in which the market price has reached the level at which quantity supplied equals quantity demanded
  8. when fall in price of one good reduces demand for another good (sweaters and sweatshirts)
  9. increase in supply
  10. the claim that other things being equal the quantity demanded of a good falls when the price of the good rises
  11. quantity supplied is greater than quantity demanded
    excess supply
    firms respond by cutting prices
    falling prices increase quantity demanded and decrease quantity supplied
    market price is above equilibrium price
  12. behavior of people as they interact with one another in competitive markets
  13. when fall in price of one good raises demand for another good, pairs of good used together (peanut butter and jelly)
  14. shows how buyers and seller behave and how they interact with one another
    shows how supply and demand determine prices in market economy and how prices allocate economy's scare resources
  15. in market economy, signals that guide economic decisions and allocate scare resources
  16. markets that have only one seller that sets the price
    EX: cable TV company
  17. negatively
  18. lower income means you have less to spend
    if demand for good falls when income falls = normal good
    if demand for good rises when income falls (bus rides) = inferior good
  19. market price above equilibirum price
    causes market price to fall
  20. the price of any good adjusts to bring the quantity supplied and quantity demanded for the good into balance
  21. a table that shows the relationship between price of good and quantity demanded
  22. subsitituion = when fall in price of one good reduces demand for another good (sweaters and sweatshirts)
    complement = wen fall in price of one good raises demand for another good, pairs of good used together (peanut butter and jelly)
  23. if demand for good rises when income falls (bus rides)
  24. raises
  25. as price of good rises, the quantity supplied rises
  26. shows how total quantity demanded of good varies as the price of the good varies, while all other favors that affect how much consumers want to buy are held constant
  27. determined by intersection of supply and demand
    the quantity demanded equals quantity supplied
  28. sum of the supplies of all sellers
    shows how the total quantity supplied varies as the price of the good varies
  29. if demand for good falls when income falls
  30. income
    price of substitutes and complements
    tastes
    expectations
    number of buyers
  31. exactly equals
  32. ...
  33. as the price of good falls, quanitity demanded rises
  34. shows how the quantity of good demanded depends on price
    slopes downward
  35. 1. goods offered for sale are exactly the same
    2. buyers and sellers are so numerous that no single buyer or seller has any influence over the market price
    buyers and sellers must accept the price the market determines = price takers
    at market price buyers can buy all they want and sellers can sell all they want
    EX: wheat market - no single buyer or seller can influcene the price of wheat, each takes market price as given
  36. the claim that other things being equal the quantity supplied of a good rises when the price of the good rises
  37. 1. input prices
    2. technology
    3. expectations
    4. number of sellers
  38. sum of all individual demands for a particular good or service
  39. table that shows the relationship between the price of a good and the quanitity supplied, holding constant everything else that influences how much producers of the good want to sell
  40. the curve relating price and quantity supplied
    slopes upward because, other things being equal, a higher price means a greater quantity supplied
  41. amount of good that sellers are willing and able to sell
    at low prices, produce less or shut down and quantity supplied falls to zero
  42. 1. income
    2. prices of related goods
    3. tastes
    4. expectations
    5. number of buyers
    6. prices of related goods
  43. shows how quantity of good supplied depends on price
    slopes upward
  44. many buyers and sellers whom have little or no influence on market price
  45. ...
  46. market price below equilibirum price
    causes market price to rise
  47. expectations about future affect demand for a good or service toay
  48. group of buyers and sellers of particular good or service
    buyers - determine demand for product
    sellers - determine supply of product
  49. ...
  50. line relating price and quantity demanded