Supply
The Law of Supply states that as prices INCREASE supply _______
Increases
The Law of Demand states that as prices INCREASE, demand______
Decreases
A marginal utility schedule is
a table showing the additional utility derived from consuming an additional unit of a good.
The federal minimum wage is an example of this type of government policy.
price floor
The market equilibrium point is
Where supply and demand price points are the same
When the government provides subsidies to solar panel manufacturers, production increases even if prices stay the same. This would cause what to happen to the supply curve?
It SHIFTS to the RIGHT
a) movement along the curve
b) a shift to the right
c) a shift to the left
movement along the curve
\A student receives 20 utils of satisfaction from the first slice of pizza, 12 from the second, and 5 from the third. This economic principle explains why the additional satisfaction keeps falling is
When the government sets a minimum price for milk above the equilibrium price, the most likely result is this market condition.
surplus
When a government sets a maximum legal price below equilibrium for rent, the most likely market result is this condition.
a shortage
A hurricane destroys several oil refineries, reducing gasoline production nationwide. On a supply graph, what would happen to the supply curve?
It SHIFTS to the LEFT
When people's incomes rise, they will usually buy more of the goods they want, even if the prices for the item have not changed. What are these goods called?
normal goods
When total utility is at its MAX, marginal utility is at ___
zero
Carrying costs are associated with:
Advertising can affect the demand curve in the context of surplus by:
shifting it to the right (increasing demand) and getting rid of surplus
A farmer can grow corn or soybeans. We are looking at corn supply and demand and considering soybeans to be the "substitute good". Due to a drop in popularity, the price of a substitute good, soybeans, drops dramatically. What happens to the supply curve for corn?
It SHIFTS to the RIGHT.
The demand for iphones suddenly increased dramatically. This resulted in an increased demand for iphone cases. Economists would call these two goods:
complimentary goods
What is a function of prices related to income?
Prices redistribute income.
If carrying costs are too great, what can happen to a supplier?
The supplier could go bankrupt or out of business
A price ceiling that is set above the equilibrium price will have this effect on the market.
no effect
What are the three determinants of supply?
improvement in technology
change in production cost
change in the price of substitute goods
What are five determinants of demand?
Change in consumer taste
change in consumer income
change in the price of related goods
change in population
change in consumer expectations
The three main purposes of prices in a transaction are:
transmit information, provide incentives, and redistribute income
A price floor-barrier helps manage surplus by setting a price above the market equilibrium. Although this often creates a surplus, it still helps sellers because it guarantees them:
a minimum price for the product
What are some possible consequences of government price ceilings such as rent control or food price caps?
homelessness, bread lines, black market