The various amounts of a product that consumers are willing and able to purchase at each of a series of possible prices during a specified period of time
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What is the definition of a market?
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A place that brings together buyers and sellers
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What is the "Income effect"?
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Lower prices increase buying power enabling one to buy more quantity
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What is the "substitution effect"?
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Lower prices incent consumers to substitute lower price goods for current goods
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The Principle of Diministing Marginal Utility states that...
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Consumers get less marginal utility out of each successive unity, and a lower price is needed to get one to buy an extra unit
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A Change in Demand...
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Makes the demand curve shift to the right or to the left
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The 5 determinants of demand are...
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1. Tastes or preference change
2. Number of buyers change
3. Income
4. Price of related goods
5. Expectations of consumers
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A decrease in the price of a complementary good will shift the demand curve to the...
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Right
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The Change in quantity demanded...
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Is a move from one point to another on the curve
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A surplus of a product will arise when price is:
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above equilibrium, with the result that quantity supplied exceeds quantity demanded.
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If the supply and demand curves for a product both decrease, then equilibrium:
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quantity must decline, but equilibrium price may rise, fall, or remain unchanged.
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The demand curve shows the relationship between:
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price and quantity demanded.
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An increase in the quantity demanded means that:
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price has declined and consumers therefore want to purchase more of the product.
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The supply curve shows the relationship between:
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price and quantity supplied.
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When the price of a product increases, a consumer is able to buy less of it with a given money income. This describes the:
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income effect.
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A government subsidy to the producers of a product:
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increases product supply.
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An improvement in production technology will:
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shift the supply curve to the right.
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If there is a surplus of a product, its price:
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is above the equilibrium level.
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Which of the following statements is correct?
a. If demand increases and supply decreases, equilibrium price will fall.
b. If supply increases and demand decreases, equilibrium price will fall.
c. If demand decreases and supply increases, equilibrium price will rise.
d. If supply declines and demand remains constant, equilibrium price will fall.
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b.
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A Change in supply occurs when...
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Producers are willing to produce more, even though prices stay the same
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