Macroeconomic-Exam 2

Description:	bradley r. schiller
Category:	Business
Created by:	leepao07 on 2009-07-15

Question	Answer
the result when a price ceiling is set below the equilibrium market price	market shortage
the price at which the quantity demanded equals the quantity supplied of a good	equilibrium price
a lower limit set for the price of a good	price floor
the willingness and ability to sell various quantities of a good at alternative prices	supply
the willingness and ability to buy a particular good at some price	demand
the assumption by economists that nothing else changes	ceteris paribus
where businesses purchase the factors of production	factor market
the use of market price and sales to signal desired output	market mechanism
refers to the inverse relationship between price and quantity	law of demand
occurs because of a change in one of the determinants such as income or tastes	shift in demand
an upper limit imposed on the price of a good	price ceiling
a curve depicting the quantities of a good a consumer is willing and able to buy at alternative prices in a given time period, ceteris paribus	demand curve
the sum of all producers' sales intension	market supply
a table showing the quantities of a good a consumer is willing and able to buy at alternative prices in a given time period, ceteris paribus	demand schedule
where goods and services are exchanged	product market
goods frequently consumed in combination	complementary goods
the amount by which the quantity supplied exceeds the quantity demanded at a given price	market surplus
goods that can be used in place of each other	substitute goods
the quantity of a good supplied in a given time period increases as its price increases, ceteris paribus	law of supply
the value of the most desired forgone alternative	opportunity cost
the sum of individual demands	market demand
the demand curve shows how much of a good a buyer will actually buy at a given price.	false
a change in one of the determinants of demand causes a movement along the demand curve for the good	false
a decrease in the price of one good can cause the demand for another good to increase if the goods are complement	true
supply curves reflect the potential behavior of the sellers or producers of a good or service, not of the buyers	true
the "law of supply" has nothing to do with opportunity cost	false
when the number of suppliers in a market changes, the market supply curve also changes, even if the individual supply curves of original suppliers do not shift	true
the equilibrium price can be determined through the process of trial and error by both the buyers and the sellers in a market	true
there are no shortages or surpluses when the price in a market is equal to the equilibrium price for the market.	true
the government can eliminate a surplus by putting a price floor in place.	false
when economists say that the market mechanism provides an "optimal" allocation of resources they mean that all consumer desires a satisfied and business profits are maximized.	false
goals of principal actrs n economy r: a)incme 4 consume, profts fr buss, n tax 4 govt b)gds n srvcs 4 consme, scrce rsurces fr buss, n rsurces nt usd by buss fr govt. c) satsfy frm purches 4 consume, proft fr buss, n gen wlfare fr govt. d)	c) satisfaction from purchases for consumers, profits for business, and general welfare for government
which of the following helps to explain why economic interaction occurs? a) limited ability to produce what we need b)constraints on time, energy, and resources c) the gains possible from specialization d) all of the above	d) all of the above
consumers: a) receive goods and services from the product market b) receive dollars from the product market c) provide dollars to the factor market d) receive factors of production from the factor market	a) receive goods and services from the product market
ceteris paribus, the law of demand states that as price falls: a) quantity demanded decreases b) quantity demanded increase c) demand decreases d) demand increase	b) quantity demanded increase
which of the following must be held constant according to the ceteris paribus assumption in defining a demand schedule? a) the price of the good itself b) expectation of sellers c) income d)technology	c) income
the quantity of a good that a consumer is willing to buy depends on: a) the price of the good b) the consumer's income c) the opportunity cost of purchasing that good d) all of the above	d) all of the above
jon's demand schedule for donuts indicates: a) how much he likes donuts b) his opportunity cost of buying donuts c) why he likes donuts d) how many donuts he will actually buy	b) his opportunity cost of buying donuts
ceteris paribus, according to the law of supply, as price rises: a) quantity supplied decreases b) quantity supplied increase c) supply decreases d) supply increases	b) quantity supplied increases
wen producr sells good, ceteris paribus: a) thr is no chnge n supply or qnty supplied b) supply curve shifts to left, bt qnty supplied remains same c) qnty supplied of good falls, bt supply remains unchngd d) supply curve shfts to let, n qnty supply falls	a) there is no change in supply or the quantity supplied
if a farmer can grow either rice or soybeans, there will be a change in the supply of rice when: a) the price of rice changes b) the price of soybeans changes c) the demand for rice d) consumers want to buy more rice at the current price	b) the price of soybean changes
suppose equilibrium price fr skateboards increases n equilibrium quantity increase. we cn conclude tat thr has been: a)increase n demnd fr skateboards b)decrease n demnd fr skateboards c)decrease n supply of skateboards d)increase in supply of skateboards	a) an increase in demand for skateboards
calculate market supply we: a) + qnty supply fr ea individual supply schdule horizontal b) + quantities supplied fr ea individual supply schedule vertical c) find average qnty supplied @ ea price d) find diff betwn qnty supplied n qnty demand @ ea price	a) add the quantities supplied for each individual supply schedule horizontally
n market fr web design services, increase n # of ppl w/web designin skills will cause: a) + n equil $ n decrease n equil qnty b) decrease n equil $ n + n equil qnty c) increase n equil $ n increase n quil qnty d) decrease n equil $ n decrease n eqil qnty	b) a decrease in the equilibrium price and an increase in the equilibrium quantity
in a market, the eqilibrium price is determined by: a) what buyers are willing and able to purchase b) what sellers are willing and able to offer for sale c) both demand and supply d) the government	c) both demand and supply
a rightward shift in a demand curve and a rightward shift in a supply curve both result in a: a) lower equilibrium quantity b) higher equilibrium quantity c) lower equilibrium price d) higher equilibrium	b) higher equilibrium quantity
if # of consumes n a market decrease, tis will cause: a) increase n equil price n decrease n equil qnty b) decrease n equil price n increase n equil qnty c) increase n equil price an increase in equil qnty d) decrease n equil $ n decrease in equil qnty	d) a decrease in the equilibrium price and a decrease in the equilibrium quantity
in a market economy, the ppl who receive the goods and services produced are the ppl who: a)need the goods and service b) want the goods and services the most c) have the most political power d) are willing and able to pay the market price	d) are willing and able to pay for the market price
refer to question 18 on multiple choice	c) the allocation of resources by the market is likely to be the best possible, given scarce resources and income constraints
refer to question #19 on multiple choice	a) less than the equilibrium quantity, and price will be less than the equilibrium price
refer to question #20 on multiple choice	b) a decrease in the supply of gasoline causes the price of gasoline to increase
market participants	maximizing behavior and specialization and exchange
maximizing behavior	it's the consumer's behavior get a goods and service at the max of lowest payment. and it's the producer's behavior to maximize profit
specializing and exchange	1. our absolute inability as individuals to produce all the things we need or desire. 2. the limited amt of time, energy, and resources we have for producing those things we could make for ourselves
factors market	any place where factors of production are bought and sold
product market	any place where finished goods and services (products) are bought and sold.
opportunity cost	the most desired goods or services that are forgone in order to obtain something else
the two markets are:	locating markets and factor markets
locating markets	a market exist wherever and whenever an exchange takes place
supply	the ability and willingness to sell (produce) specific quantities of a good at alternative prices in a given time period, ceteris paribus.
demand	the ability and willingness to buy specific quantities of a good at alternative prices in a given time period, ceteris paribus.
demand schedule	a table showing the quantities of a good a consumer is willing and able to buy at alternative prices in a given time period, ceteris paribus.
demand curve	a curve describing the quantities of a good a consumer is willing and able to buy at a alternative prices in a given time period, ceteris paribus.
law of demand	the quantity of a good demanded in a given time period increases as its price falls, ceteris paibus.
determinants of market demand	1. tastes 2. income 3. other (alternative) goods 4. expectations 5. number of buyers
substitute goods	goods that substitute for each other; when the price of good x rises, the demand for good y increases, ceteris paribus.
complementary goods	goods frequently consumed in combination; when the price of good x rises, the demand for good y falls, ceteris paribus
shift in demand	change in the determinants of market demand
changes in quantity demanded	movements along a given demand curve, in response to price changes of that good
change in demand	shifts of the demand curve due to changes in tastes, income, other goods or expectations
market demand	the total quantities of a good or service ppl are willing and able to buy at alternative prices in a given time period; the sum of individual demands
market supply	the total quantities of a good that sellers are willing and able to see at alternative prices in a given time period, ceteris paribus.
determinants of market supply	1. technology 2. factor cost 3. other goods 4. taxes and subsidies 5. expectations 6. number of sellers
law of supply	the quantity of a good supplied in a given time period increases as its price increases, ceteris paribus
market supply	an expression of sellers' intentions-an offer to sell-not a statement of actual sales
changes in quantity supplied	movements along a given supply curve
changes in supply	shifts of the supply curve
equilibrium price	the price at which the quantity of a good demanded in a given time period equals the quantity supplied
market mechanism	the use of market prices and sales to signal desired outputs (or resource allocations)
price floor	lower limit set for the price of a good
market surplus	the amount by which the quantity supplied exceeds the quantity demanded at a given price; excess supply
market shortage	the amount by which the quantity demanded exceeds the quantity supplied at a given price; excess demand