Economics Chapter 3

When economists talk about supply, they are referring to a relationship between price received for each unit sold and the _________________.

quantity supplied

The demand curve for a typical good has a(n):

negative slope because some consumers switch to other goods as the price rises.

If a firm faces ________________________, while the prices for the output the firm produces remain unchanged, a firm’s profits will increase.

lower costs of production

If the price is below the equilibrium level, then the quantity demanded will exceed the quantity supplied. This is known as ___________________

excess demand

In economics, the demand for a good refers to the amount of the good that people:

will buy at various prices.

A change in price of a good or service typically causes ___________________________ for that specific good or service.

a change along the supply curve

After widespread press reports about the dangers of contracting "mad cow disease" by consuming beef from Canada, the likely economic effect on the U.S. demand curve for beef from Canada is:

a shift of the demand curve for beef to the left.

A demand curve shows the relationship between price and _________________ on a graph.

quantity demanded

According to the law of supply:

there is a direct relationship between price and the quantity supplied.

the term "ceteris paribus" means that:

all variables except those specified are constant.

The nature of demand indicates that as the price of a good increases:

buyers desire to purchase less of it.

Economists refer to the relationship that a higher price leads to a lower quantity demanded as the _____________.

law of demand

Interpret the following statement: "An increase in the price of wheat will encourage farmers to increase the quantity of wheat supplied to the market."

The statement is correct.

A severe freeze has once again damaged the Florida orange crop. The impact on the market for orange juice will be a leftward shift of:

the supply curve.

______________ are enacted when discontented sellers, feeling that prices are too low, appeal to legislators to keep prices from falling.

Price floors

The downward slope of the demand curve again illustrates the pattern that as _____________ rises, _________________ decreases.

price, quantity demanded

The ___________ is the only price where quantity demanded is equal to quantity supplied.

equilibrium price

A supply curve is a graphical illustration of the relationship between price, shown on the vertical axis, and ____________, shown on the horizontal axis.

quantity

_________________ refers to the total number of units that are purchased at that price.

quantity demanded

Which of the following would reduce the supply of microcomputers?

higher wage rates for the workers that assemble the computers

The demand schedule for a good:

ndicates the quantities that will be purchased at alternative market prices.

If new manufacturers enter the computer industry, then (ceteris paribus):

the supply curve shifts to the right.

But nearly all supply curves share a basic similarity: they slope _______________.

up from left to right

When quantity demanded decreases in response to a change in price:

there is a movement up along the demand curve.

A report surfaced lately that President Obama has given the order to federal agents to "round up" farm workers that have illegally entered the U.S. and deport them. The impact of this order on the market for vegetables will be a leftward shift of:

the supply curve.

A drought decreases the supply of agricultural products, which means that at any given price a lower quantity will be supplied; conversely, especially good weather would shift the __________________ .

supply curve to the right