Economics by Arnold Chapter 3
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| Define "Ceteris Paribus" | show 🗑
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| True or False: "Demand is the amount of a good that buyers wish to purchase" | show 🗑
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| Define "Demand by an individual" | show 🗑
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| Define the "Law of Demand." | show 🗑
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| show | True
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| Define "Absolute Price." | show 🗑
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| show | The price of a good in terms of other goods.
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| Which price, Absolute Price or Relative Price, is important to buyers and sellers? | show 🗑
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| show | As an individual consumes more of a good the marginal utility of the good will fall.
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| Define "Market Demand." | show 🗑
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| show | It is the specific quantity that will be purchased at a specific price.
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| show | False - a change in price will affect Quantity Demanded but it will have no effect on Demand (i.e. Demand Curve). Instead you will simply move along a given demand curve.
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| show | By a shift in the demand curve.
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| How would you graphically represent an increase in demand? | show 🗑
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| show | Because at each price the quantity demanded is greater.
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| show | The demand curve would shift to the left.
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| show | It depend on whether the good is a normal good (superior good), an inferior good or a neutral good.
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| show | A good whose demand rises as income rises.
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| What is an inferior good? | show 🗑
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| What is a neutral good? | show 🗑
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| What is a substitute for good x? | show 🗑
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| How will an increase in the price of a substitute affect the demand for good x? | show 🗑
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| What is a complement for good x? | show 🗑
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| show | The demand for good x will decrease.
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| show | The more buyers the greater the market demand.
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| If buyers expect the future price of good x to increase how will this affect the current demand for x? | show 🗑
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| True or False: "Supply is the amount that sellers wish to sell." | show 🗑
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| Define "Supply by an individual" | show 🗑
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| Define the "Law of Supply" | show 🗑
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| True or False: "Supply, Supply Curve and Supply Schedule all mean the same thing." | show 🗑
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| Define "Market Supply." | show 🗑
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| Why is the supply curve upward sloping? | show 🗑
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| Define "Quantity Supplied." | show 🗑
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| True or False: "An increase in price will cause an increase in supply." | show 🗑
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| show | By a shift in the supply curve.
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| True or False: "An increase in supply would be represented by a shift up of the supply curve." | show 🗑
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| show | Supply would decrease (shift left or up).
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| show | Supply would increase (shift right or down).
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| How will an increase in the number of sellers affect the market supply? | show 🗑
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| show | Supply would decrease (farmers would be less willing to grow beans because of the higher price of corn).
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| show | Supply would decrease (sellers would prefer to wait and sell later at the higher expected price).
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| How would a per unit tax on sellers affect supply? | show 🗑
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| show | Supply would increase.
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| show | When the quantity supplied is greater than the quantity demanded.
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| show | When the quantity demanded is greater than the quantity supplied.
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| show | Surplus
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| show | The net gain to the buyer from trade. CS = maximum price the buyer is willing to pay - price they actually pay
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| show | The net gain to the seller from trade. SS = price the seller actually receives - minimum price they would have accepted.
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| If supply is constant and demand increases, what will happen to price and quantity? | show 🗑
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| show | Price falls and quantity increases.
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| show | Both decrease.
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| show | Price increases and quantity falls.
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| Define a "Price Ceiling." | show 🗑
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| show | (1) shortages, (2) fewer exchanges, (3) the use of nonprice rationing devices, (4) black market [illegal, off-the-book transactions] trades, (5) tie-in sales [two products are sold together - in this case to circumvent the price ceiling].
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| Define a "Price Floor." | show 🗑
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| show | (1) surpluses, (2) fewer exchanges, (3) reduction in product quality.
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