question
Competition among corn producers forces them to use the best technology and right mix of productive resources; otherwise their cost will be too high relative to the market price and they will be unprofitable. This is best described as:
answer
Productive efficiency
question
The price of ____ goods is a determinant of demand
answer
related
question
Producer expectations refer to firms' expectations of ____ for a good or service that they produce.
answer
future prices
question
An increase in _____ while holding supply constant results in an increase in both equilibrium price and quantity.
answer
demand
question
Which of the following are determinants of supply?
answer
1. Resource prices
2. Technology
3. Taxes and subsidies
4. Prices of other goods
5. producer expectations
6. The number of sellers in the market
2. Technology
3. Taxes and subsidies
4. Prices of other goods
5. producer expectations
6. The number of sellers in the market
question
Which of the following are determinants of demand?
answer
1. Consumers' tastes (preferences)
2. The number of buyers in the market
3. Consumers' incomes
4. The prices of related goods
5. Consumer expectations
2. The number of buyers in the market
3. Consumers' incomes
4. The prices of related goods
5. Consumer expectations
question
A decrease in demand while holding supply constant results in:
answer
a decrease in both equilibrium price and quantity
question
The ______ incurred by firms when producing a good or service arise from the prices of the inputs that are used to produce said good or service.
answer
costs of production
question
A shortage results from an excess of quantity
answer
demanded
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On a supply curve, ___ is labeled on the vertical axis
answer
Price
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A price____ is a minimum price fixed by the government, generally imposed above the price, which is otherwise known as the equilibrium price.
answer
Floor
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A _____ good is one that is used together with another good.
answer
Complementary (EX: milk and cookies)
question
The determinant of supply dealing with alternative products that can be produced by firms is called:
answer
price of substitutes in production
question
According to the law of supply, price and quantity supplied have a(n) ______ relationship.
answer
positive or direct
question
If costs of production rise, the producer has an incentive to produce ____ output.
answer
less
question
Other things equal, firms will produce and offer for sale ____ of their product at a high price than at a low price.
answer
more
question
Which of the following refers to a particular apportionment or mix of goods and services most highly valued by society?
answer
Allocative efficiency
question
Which of the following scenarios describe the appropriate effects on equilibrium price and quantity due to a decrease in supply while holding everything else constant?
answer
An oil spill causes several fisherman to leave the shrimp business and the quilibrium price of shrimp increases while quantity decreases.
A fishing tax is placed on all shrimp and the quilibrium price of shrimp increases while quantity decreases.
A fishing tax is placed on all shrimp and the quilibrium price of shrimp increases while quantity decreases.
question
A price ___ is the maximum legal price a seller may change for a product or service.
answer
ceiling
question
For most, but not all products, a rise in ____ causes an increase in demand.
answer
income
question
Which of the following has the greatest effect on the quantity supplied that producers are willing and able to supply?
answer
Price
question
The number of sellers or competitors in a market is a determinant or shifter of the ____ curve.
answer
supply
question
The vast majority of goods that are not related to one another are called ___ goods.
answer
independent
question
Which of the following decrease demand for any good or service?
answer
an unfavorable change in consumer tastes; a decrease in the price of a substitute good; falling incomes and the product is a normal good.
question
When the government provides financial assistance for the production of a good which lowers producers' costs and increases supply, it is called a ________.
answer
subsidy
question
_____ resource prices raise production costs and, assuming a fixed product price, _____ profits.
answer
Higher; reduce
question
Market ____ is a schedule or curve showing the various amounts of a product that producers are willing are able to make available for sale at each possible price during a specific period.
answer
supply
question
Which of the following correctly state that effects on equilibrium price and quantity due to an increases in demand, while holding everything else constant?
answer
Consumers expect the price of shrimp to increase in the future, therefore the equilibrium price and quantity increase now; the price of Coke increases, therefore the equilibrium price and quantity of Pepsi increase; 3-D TVs become popular, therefore the equilibrium price and quantity increase.
question
A surplus is also known as an excess of _____.
answer
supply
question
The supply curve illustrates the relationship between:
answer
price and quantity supplied
question
Government-set prices cause:
answer
distortions in resource allocation; surpluses' negative side effects; shortages
question
If an increase in supply is larger than an increase in demand, the equilibrium price will _____.
answer
decrease
question
Products that have decreased demand when consumer incomes rise and increased demand when consumer incomes fall are called ____ goods.
answer
inferior
question
With a price ceiling, quantity _____ will exceed quantity _____ resulting in a persistent shortage of product.
answer
demanded; supplied
question
In general, a rise in income causes a(n) _____ in demand for most products and a fall in income causes a(n) _____ in demand for most products, other things equal.
answer
increase; decrease
question
The law of _____ is illustrated by a downward- sloping curve.
answer
demand
question
Equilibrium price is otherwise known as market-______ price.
answer
clearing
question
A decrease in demand while holding supply constant results in _____ in both equilibrium price and quantity.
answer
a decline
question
Other things equal, the fundamental characteristic of the law of _____ is that as the price falls, the quantity supplied of a product falls.
answer
supply
question
For every good or service, the quantities demanded by individual consumers at every price are added together to computer the following:
answer
the market demand curve for a good or service
question
An economic unit, meaning a household, firm or government, should continue to engage in an activity so long as there marginal ____ exceed the marginal ____.
answer
benefit; cost
question
A decrease in equilibrium price and indeterminate result on equilibrium quantity is a result of which of the following?
answer
An increase in supply and a simultaneous and proportional decrease in demand
question
Which of the following best explains why economists "sound the alarm" when politicians advocate government-controlled prices such as price ceilings or price floors?
answer
Government-controlled prices cause shortages or surpluses, distort resource allocation, and produce negative side effects.
question
The effects on equilibrium price and quantity due to a decrease in supply and a proportional and simultaneous decrease in demand can be shown by:
answer
an indeterminate equilibrium price and a decrease in quantity
question
Which of the following demonstrate the appropriate effect on equilibrium price and quantity as a result of changes in supply and demand?
answer
Demand increases and supply increases; therefore equilibrium quantity increases and the change in price is indeterminate.
Supply increases and demand stays constant; therefore equilibrium price decreases and quantity increases.
Supply decreases and demand stays constant; there equilibrium price increases and quantity decreases.
Demand increases and supply stays constant; therefore equilibrium price increases and quantity increases.
Supply increases and demand stays constant; therefore equilibrium price decreases and quantity increases.
Supply decreases and demand stays constant; there equilibrium price increases and quantity decreases.
Demand increases and supply stays constant; therefore equilibrium price increases and quantity increases.
question
A ____ the demand curve represents a change in demand while a ____ demand curve represents a change in the quantity demanded.
answer
shift of; movement along
question
When a price ceiling is established, the new price and quantity are now at:
answer
disequilibrium
question
If a decrease in demand is greater than a decrease in supply, equilibrium price will ____.
answer
fall
question
If a increase in demand is greater than a decrease in supply, equilibrium quantity will ____.
answer
rise
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