Exam 4: The Market Forces of Supply and Demand: Part B

Suppose the demand for calendars increases in November.At the same time,the price of the ink used in the production of calendars increases.In the market for calendars,the equilibrium price rises,but the effect on the equilibrium quantity is ambiguous.

Monopolists are price takers.

When Mario's income decreases,he buys more pasta.For Mario,pasta is a normal good.

In a competitive market,the quantity of each good produced and the price at which it is sold are not determined by any single buyer or seller.

The demand curve is the upward-sloping line relating price and quantity demanded.

If orange juice and apple juice are substitutes,an increase in the price of orange juice will shift the demand curve for apple juice to the left.

When a seller expects the price of its product to decrease in the future,the seller's supply curve shifts left now.

If a good or service has only one seller,then the seller is called a monopoly.

A decrease in demand will cause a decrease in price,which will cause a decrease in supply.

When the price of a good is high,selling the good is profitable,and so the quantity supplied is large.

In a perfectly competitive market,the goods offered for sale are all exactly the same.

The law of demand states that,other things equal,when the price of a good rises,the quantity demanded of the good falls,and when the price falls,the quantity demanded rises.

A reduction in an input price will cause a change in quantity supplied but not a change in supply.

All goods and services are sold in perfectly competitive markets.

Sellers respond to a surplus by cutting their prices.

The actions of buyers and sellers naturally move markets toward equilibrium.

If the demand for movies increases at the same time as the movie industry adopts labor-saving technology for producing movies,the equilibrium price for movies will increase,but the effect on the equilibrium quantity of movies is ambiguous.

An increase in the price of a product and an increase in the number of sellers in the market affect the supply curve in the same general way.

The market supply curve shows how the total quantity supplied of a good varies as input prices vary,holding constant all the other factors that influence producers' decisions about how much to sell.

When a supply curve or a demand curve shifts,the equilibrium price and equilibrium quantity change.