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Supply and Demand - Economics
Supply and Demand - Economics
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Economics: Supply and Demand!
Flashcards
30 cards
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Questions
30
Answers
1
What is needed to create a supply schedule for a fruit smoothie shop?
the price charged and the number of smoothies supplied
all of the above
the number of other shops producing smoothies
a supply curve and the price other shops are charging
2
Normal goods are
two goods that are bought and used together.
goods used in place of one another.
goods that consumers demand less of when their incomes +
goods that consumers demand more of when their incomes +
3
Which is determined by dividing the % change in quantity demanded by % change in price
a. elasticity
d. income effect
c. law of demand
b. demand curve
4
If the elasticity of demand for a good at a price is greater than one, we describe demand as
unitary elastic.
variable.
inelastic.
elastic.
5
The law of demand says
the lower the price, the more consumers will buy.
the higher the price, the more consumers will buy.
the lower the price, the more consumers will substitute.
the lower the price, the less consumers will buy.
6
A firm's demand for its product is inelastic, then it knows that an increase in price will
decrease total revenue.
have no effect.
make the demand for the product elastic.
increase total revenue.
7
How does a firm calculate its profit?
total revenue minus total cost
variable cost plus total cost
total revenue minus marginal revenue
marginal revenue minus marginal cost
8
Advances in technology usually
lower costs and increase supply at higher price levels.
increase cost and decrease supply at all price levels.
increase cost and increase supply at lower price levels.
lower costs and increase supply at all price levels.
9
A measure of how consumers react to a change in price is known as the
income effect.
elasticity of demand.
demand curve
law of demand
10
A cost that rises or falls depending on how much is produced is a(n)
fixed cost.
variable cost.
labor cost
operating cost.
11
What factor might lead to the opening of several new pizzerias in a town?
The price of a slice of pizza has gone up
The price of a slice of of pizza has gone down.
The cost of producing pizza has doubled.
The supply of pizza is inelastic.
12
total cost for 300jackets=$400 & total cost for 301 jackets=$435, marginal cost of 301 jackets?
$435
$400
$35
$835
13
market price=$24, marginal cost = $7, the marginal revenue from the beanbag would be
$7
$24.
$31.
$17.
14
If supply is elastic
it is unaffected by changes in price.
it reacts strongly to changes in price.
producers respond slowly to changes in demand.
it is easier to predict changes in demand.
15
The shift to the right in a demand curve means a(n)
increase in substitution.
increase in demand.
decrease in demand.
decrease in income.
16
A producer's profits are maximized when marginal costs
are equal to fixed costs minus variable costs.
result in decreasing marginal returns
are less than marginal revenue.
are equal to marginal revenue
17
When a %change in price is = to %change in quantity supplied, elasticity is 1 & supply is
elastic.
variable.
inelastic.
unitary elastic.
18
Which of the following is NOT a fixed cost?
property taxes
rent
building construction costs
electricity
19
According to the law of supply,
if the price of a good falls, new firms may enter the market
if the price of a good rises, some firms will produce less
the higher the price, the greater the quantity produced
the lower the price, the greater the quantity consumed
20
Which of the following describes the substitution effect?
As demand (-), people will substitute other products.
If price of a good (+),people will substitute other products
As demand (+), people will substitute other products.
As price of a good (-),people will substitute other products
21
For most goods, a rise in people's income means that there will be a(n)
increase in demand.
decrease in demand.
substitution effect.
rise in prices.
22
If sellers expect the price of a good to rise in the future, they are likely to
set prices according to the law of demand.
put more goods on the market immediately.
store goods now and sell more in the future.
raise their prices now.
23
Total revenue is defined as the amount of...
profit a company makes
money affected by price elasticity
profit a company makes after paying taxes
money a company receives by selling its goods.
24
Which of the following is an example of an inferior good?
Lobster
Laptop Computer
New car
Generic Cereal
25
fixed cost=$14, variable cost of making 7 games=$12, what is total cost of making 7 games?
$21
$7
$26
$2
26
The law of supply describes the relationship between
demand and supply schedule.
market supply schedule and demand.
price and quantity supplied.
price and demand.
27
A demand curve illustrates the
differences in price charged by different stores.
products that are most in demand.
quantities demanded at each price by consumers.
differences in demand for different products.
28
A market supply curve shows
how the supply of goods is kept in balance.
the quantity supplied by producers at different prices
how prices affect the cost of raw materials.
supply for any set of conditions.
29
If you keep buying despite a price increase, your demand is
strong
inelastic
elastic
normal
30
Ceteris paribus is
a phrase that means "all other things held constant."
the desire to own something and the ability to pay for it.
a graphic representation of a demand schedule.
means +/- in consumption resulting from a +/- in real income
