Macro

The law of demand states that:

price and quantity demanded are inversely related

Markets explained on the basis of supply and demand

assume many buyers and many sellers of a standardized product

Graphically, the market demand curve is:

the horizontal sum of individual demand curves

The demand curve shows the relationship between

price and quantity demanded

Economists use the term "demand" to refer to

a schedule of various combinations of market prices and amounts demanded

The relationship between quantity supplied and price is _____ and the relationship betweenquantity demanded and price is _____

direct and inverse

When the price of a product increases, a consumer is able to buy less of it with a givenmoney income. This describes

The income effect.

A demand curve

Indicates the quantity demanded at each price in a series of prices

The income and substitution effects account for

the downward sloping demand curve

When the price of a product rises, consumers shift their purchases to other products whoseprices are now relatively lower. This statement describes

The substitution effect

A rightward shift in the demand curve for product C might be caused by:

decrease in the price of a product that is complementary to C

If the demand curve for product B shifts to the right as the price of product A declines,then:

A and B are complementary goods

If the price of product L increases, the demand curve for close-substitute product J will

Shift to the right

If the price of K declines, the demand curve for the complementary product J will

shift to the right

If L and M are complementary goods, an increase in the price of L will result in:

decrease in the sales of M.

If X is a normal good, a rise in money income will shift the

demand curve for Z to the left

A decrease in the price of digital cameras will:

Shift the demand curve to the right for memory cards

When the equilibrium decreases

It shifts right

Markets explained on the basis of supply and demand:

assume many buyers and many sellers of a standardized product.

The law of demand states that:

price and quantity demanded are inversely related

The law of supply indicates that:

producers will offer more of a product at high prices than they will at low prices.

A firm’s supply curve is upsloping because:

) beyond some point the production costs of additional units of output will rise.

A market is in equilibrium:

if the amount producers want to sell is equal to the amount consumers want to buy

The satisfaction or pleasure one gets from consuming a good or service is:

Utility

Recession leads too

Higher unemployment reduced output reduced income

The short-run alternation between economic downturns, recessions, and economic upturns and expansions is known as

Business cycle

The key statistic to measure economic growth is

Real GDP per capita

Quantity demanded

amount that consumers plan to buy during a given time period at a particular price

Change in quanity demanded

A change in price results in a movement along the demand curve

Assume product A is an input in the production of product B. In turn product B is acomplement to product C. We can expect a decrease in the price of A to

increase the supply of B and increase the demand for C

Suppose that corn prices rise significantly. If farmers expect the price of corn to continue rising relative to other crops, then we would expect suplly to do?

…

At the current price there is a shortage of a product. We would expect price to:

increase, quantity demanded to decrease, and quantity supplied to increase

If price increases what happens to quanity demanded & quanity supplied?

quanity demanded decreases quantity supplied increases

Productive efficiency refers to when

The use of the lease-cost method of production

allocative efficiency is concerned when

producing the combination of goods most desired by society

an excise tax will ______ price

increase price

An increase in equilibrium quanity will shift equilibrium to the ______

left