Exam 3: A: Supply, Demand, and the Market Process

An important assumption that is made when constructing a demand schedule is that

Which of the following will decrease the demand for coffee?

Bill is willing to cut lawns for a minimum of $200 a week. He is, however, paid $250 for the same service by a lawn maintenance company. This is an example of

Suppliers recognize there is a shortage in the market for their product when they notice that

If price falls, what happens to the quantity demanded for a product?

Two goods are considered substitutes only if

Willingness to pay

When economists say the quantity supplied of a product has decreased, they mean the

An increase in supply will cause

Other things constant, a decrease in consumer income will

If Harry is paid $25,000 to sell his crop of tomatoes even though he would have been willing to have sold the crop for as little as $20,000, this indicates that

When there is excess demand for a product in a market,

If a large percentage increase in the price of a good results in a small percentage increase in the quantity supplied of the good, supply is said to be

Use the table below to choose the correct answer. The table is a schedule of the supply and demand for ground hamburger meat (both given in thousands of pounds per month). The equilibrium market price of ground hamburger meat would be

Ceteris paribus, a decrease in the price of a good will cause the

The price of a good will tend to rise when

If the quantity of a good supplied is highly sensitive to the price of the good, economists say the supply of the good is relatively

The invisible hand principle indicates that competitive markets can help promote the efficient use of resources

Assuming Chinese food and Thai food are substitutes, if Lucy Ho's Chinese restaurant reduces its prices,

When economists say the supply of a product has decreased, they mean that