Term
| The law of demand refers to how |
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Definition
| the quantity demanded changes when the price of the good changes. |
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Term
| There are five hundred buyers in the market for cheese. If we know each individual's demand curves, to find the market demand, we must |
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Definition
| add the quantities that each buyer will purchase at every price. |
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Term
| A change in the demand for apples could result from any of the following EXCEPT |
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Definition
a change in the price of an apple.
It could result from:
a change in the number of buyers, a change in income, a change in the price of a banana, or increased preferences for fresh fruit consumption for health reasons. |
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Term
| To access Internet services, consumers must use a computer. If computer prices fall, what is the effect on the demand for Internet services? |
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Definition
| The demand for internet services increases. |
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Term
| Which of the following brings only an increase in the quantity demanded of a good? |
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Definition
| A fall in the price of the good itself |
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Term
| If the demand for a good increases when people's incomes increase, |
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Definition
| the good is a normal good |
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Term
| People come to expect that the price of a gallon of gasoline will rise next week. As a result, |
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Definition
| today's demand for gasoline increases. |
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Term
| Pizza and tacos are substitutes, and the price of a pizza increases. Which of the following correctly indicates what happens? |
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Definition
| The quantity of pizza demanded decreases and the demand for tacos increases. |
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Term
| Which of the following increases the supply of a product? |
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Definition
| lower prices for the resources used to produce the product |
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Term
| Milk can be used to produce cheese or butter. If the price of a pound of butter rises, what happens to the supply of cheese? |
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Definition
| The supply of cheese decreases. |
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Term
| If the number of sellers decreases, then the supply curve ________ and the supply ________. |
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Definition
| shifts leftward; decreases |
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Term
| The price of salsa rises. How does the increase in the price of salsa affect the supply of salsa? |
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Definition
| There is no change to the supply of salsa but the quantity of salsa supplied increases. |
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Term
| The market supply curve is the |
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Definition
| horizontal sum of the individual supply curves |
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Term
| Market equilibrium occurs when |
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Definition
| the quantity demanded equals the quantity supplied. |
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Term
| Assume a competitive market is in equilibrium. There is an increase in demand, but no change in supply. As a result the level of equilibrium price is ________, and the level of equilibrium quantity is _______. |
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Definition
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Term
| How does an increase in supply affect a service's equilibrium price and quantity? |
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Definition
| The price falls and the quantity increases. |
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Term
| If the demand and supply both increase equally, then the equilibrium price ________ and the equilibrium quantity ________. |
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Definition
| does not change; increases |
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Term
| When the demand for a good decreases, its equilibrium price ________ and equilibrium quantity ________. |
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Definition
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Term
| The price elasticity of demand measures which of the following? |
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Definition
| how responsive the quantity demanded is to changes in price |
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Term
| Suppose the price of a DVD rose from $15 to $17 and the quantity demanded decreased from 1,000 per month to 900 per month. Using the midpoint formula, the ________ percent change in price lead to a ________ percent change in the quantity demanded. |
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Definition
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Term
| If the percentage change in the quantity demanded is not zero but is less than the percentage change in the price, demand is |
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Definition
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Term
| Perfectly inelastic demand means that consumers |
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Definition
| will buy a certain quantity, regardless of price. |
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Term
| If a 2 percent change in price leads to a ________ percent change in the quantity demanded, then demand is ________. |
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Definition
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Term
| A firm can sell 10 units if the price is $100 and can sell 8 units if the price is $125. Using the midpoint method, what is the price elasticity of demand? |
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Definition
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Term
| Along a linear (straight-line) downward-sloping demand curve, demand is unit elastic |
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Definition
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Term
| Suppose a firm increases the price it charges and nothing else changes. The firm's total revenue does not change. What can we conclude about the price elasticity of demand? |
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Definition
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Term
| If demand is inelastic and the price falls, the total revenue |
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Definition
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Term
| The price elasticity of supply measures the responsiveness of ________ to a change in |
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Definition
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Term
| If the supply curve is ________, the elasticity of supply is ________. |
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Definition
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Term
| If the price of a product increases by 10 percent and the quantity supplied increases by 5 percent, then the elasticity of supply is |
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Definition
| less than one and supply is inelastic |
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