Exam 3: Demand and Supply 

What will happen when the price of a good is held below its equilibrium price?

Consumers substitute between goods in response to changes in relative prices.

Your demand for DVD's is

When the price of a good increases, consumers experience a _________ in their purchasing power.

The law of _________ asserts that consumers will purchase smaller quantities of a good when its price is higher.

Which one of the following variables will change in response to a change in price?

Because our price system does not ration goods effectively, most goods consumed in the U. S. are rationed by a lottery system.

The real income effect explains why consumers buy less of a good when its _________ rises.

What are the two factors that account for the law of demand?

Along a given supply curve, higher prices correspond to higher quantities supplied.

The positive slope of the demand curve reflects the fact that

Table 3.2 -According to Table 3.2, at a price of $8 per unit,

Suppose that the price of corn is held above its equilibrium price. You would expect to see

What is on the horizontal axis when we plot a demand curve?

Changes in a firm's production costs will shift the firm's supply curve.

What is true at prices above the equilibrium price for a product?

Which of the following will cause an increase in the demand for electricity?

The law of demand asserts that consumers recognize higher prices as a sign of quality, and that a price increase leads them to increase their demand for a good.

The equilibrium price of a good is determined by

What does the law of demand assert about the relationship between price and quantity demanded?