Exam 4: Coordinating Smart Choices: Demand and Supply

When the price is below the market-clearing price,

When supply increases, price rises and quantity demanded increases.

If we observe a rise in the equilibrium price of product A, we know that either the demand for A has

Coffee is a normal good. A decrease in income

A surplus is the amount by which quantity

If the price of Pepsi rises, the price of Coke ________ because ________.

In a voluntary exchange, the price must be more than the opportunity cost of the buyer.

Increasing the minimum age for buying beer means that the price of beer will ________ because ________.

Falling prices provide incentives for businesses to decrease supply and for consumers to increase demand.

Rising prices for a service

A market is a process - the interactions between buyers and sellers.

If marginal cost is greater than marginal benefit at the current quantity, self-interest will lead to an increase in quantity.

Deadweight loss is a loss to consumers and a gain to producers.

When the price is above the market-clearing price,

Figure 4.2.3. -Look at Figure 4.2.3. At a price of $4, how many units are sold in the market?

When demand increases, price rises and quantity supplied increases.

For exchange to be voluntary, price must be less than the

Price signals in markets

Producer surplus is zero at an efficient market outcome.

Figure 4.2.1 -In Figure 4.2.1, the quantity bought and sold at the equilibrium price is