Ch 4: Summary + True And False Questions

a ______________ _______ has many buyers and sellers, each of whom has little or no influence on the market price. economists use the supply and demand model to __________ competitive markets.

the downward-sloping demand curve represents the ______ ____ __________, which states that the quantity buyers demand of a good depends negatively on the good's price. besides price, demand depends on buyers' incomes, tastes, expectations, the price of substitutes and complements, and number of buyers. if one of these factors changes, the D curve ________.

the upward-sloping supply curve represents the _______ _____ _________, which states that the quantity sellers supply depends positively on the good's price. other determinants of supply include input prices, technology, expectations, and the number of sellers. changes in these factors ________ the S curve.

the intersection of S and D curves determines the market equilibrium. at the ______________ ________, quantity supplied equals quantity demanded. if the market price is above equilibrium, a ___________ results, which causes the price to fall.

if the market price is below equilibrium, a ___________ results, causing the price to rise. we can use the supply-demand diagram to __________ the effects of any event on a market.

first, we determine whether the event shifts one or _______ curves. second, we determine the ______________ of the shifts. third, ___________ the new equilibrium to the initial one.

in market economies, ________ are the signals that guide economic decisions and allocate scarce resources. *following are true and false questions* in a market economy, supply and demand determine both the quantity of each good produced and the price at which it is sold.

sellers as a group determine the demand for a product, and buyers as a group determine the supply of a product. a yard sale is an example of a market.

a newspaper's classified ads are an example of a market. in a competitive market, the quantity of each good produced and the price at which it is sold are not determined by any single buyer or seller.

the quantity demanded of a product is the amount that buyers are willing and able to purchase at a particular price. the demand curve is the upward-sloping line relating price and quantity demanded.

if the demand for a good falls when income falls, then the good is an inferior good. when an increase in the price of one good lowers the demand for another good, the two goods are called complements.

whenever a determinant of demand other than price changes, the demand curve shifts. the quantity supplied of a good or service is the amount that sellers are willing and able to sell at a particular price.

the market supply curve shows how the total quantity supplied of a good varies as input prices vary, holding constant all the other factors that influence producers' decisions about how much to sell. supply and demand together determine the price and quantity of a good sold in the market.

a market's equilibrium is the point at which the supply and demand curves intersect. at the equilibrium price, quantity demanded is equal to quantity supplied.

at the equilibrium price, buyers have bought all they want to buy, but seller have not sold all they want to sell. demand refers to the amount buyers wish to buy, whereas the quantity demanded refers to the position of the demand curve.

supply refers to the position of the supply curve, whereas the quantity supplied refers to the amount suppliers wish to sell. in a market economy, prices are the signals that guide the allocation of scarce resources.