In a market economy, supply and demand are important because they
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play a critical role in the allocation of the economy's scarce resources
determine how much of each good gets produced
can be used to predict the impact on the economy of various events and policies
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An increase in quantity demanded
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results in a movement downward and to the right along a demand curve
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An increase in the price of a good will
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decrease quantity demanded
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The law of demand states that, other things equal, an increase in
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price causes quantity demanded to decrease
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Which of the following demonstrates the law of demand?
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Dave buys more donuts at $0.25 per donut than at $0.50 per donut, other things equal.
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The market demand curve
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represents the sum of the quantities demanded by all the buyer at each price of the good.
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A leftward shift of a demand curve is called a
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decrease in demand
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Which of the following would not shift the demand curve for mp3 players?
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a decrease in the price of mp3 players
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Which of the following is not a determinant of demand for a goods (say, coffee)?
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the price of a resource that is used to produce the good
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A very hot summer in Atlanta will cause
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the demand for jackets to decrease.
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In a market economy,
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supply and demand determine prices and prices, in turn, allocate the economy's scarce
resources.
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Which of the following would not shift the demand curve for mp3 players?
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a decrease in the price of mp3 players
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Each of the following is a determinant of demand except
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production technology.
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Suppose you like to make, from scratch, pies filled with banana cream and vanilla pudding. You notice that the price of bananas has increased. As a result, your demand for vanilla pudding would
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decrease.
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If a study by medical researchers finds that eating brown rice causes weight loss while eating white rice causes weight gain, then we likely would see
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an increase in demand for brown rice and a decrease in demand for white rice.
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If the number of buyers in a market decreases, then
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demand will decrease.
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Warrensburg is a small college town in Missouri. At the end of August each year, we can expect the market demand for fast food in Warrensburg
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increases.
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Which of the following demonstrates the law of supply?
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When ketchup prices rose, ketchup sellers increased their quantity supplied of ketchup.
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A supply curve slopes upward because
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an increase in price gives producers an incentive to supply a larger quantity.
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To say that a price floor is binding (effective) is to say that the price floor
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causes quantity supplied to exceed quantity demanded.
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Which of the following is true regarding the production possibilities frontier (PPF) for the economy?
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Any point on the PPF represents an efficient level of production.
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