Macroeconomics Chapter 3:

If a firm faces ____________ , while the prices for the output the firm produces remain unchanged, a firm's profits will increase.

lower costs of production

A drought decreases the supply of agricultural products, which means that at any given price a lower quantity will be supplied; conversely, especially good weather would shift the

supply curve to the right

After widespread press reports about the dangers of contracting "mad cow disease" by consuming beef from Canada, the likely economic effect on the U.S. demand curve for beef from Canada is:

a shift of the demand curve for beef to the left.

A demand curve shows the relationship between price and____________ on a graph.

quantity demanded

According to the law of supply:

there is a direct relationship between price and the quantity supplied.

When ________________ , a firm will supply a higher quantity at any given price for its output, and the supply curve will shift to the right.

costs of production fall

The ____________ is the quantity where quantity demanded and quantity supplied are equal at a certain price.

equilibrium quantity

The _______________ is the only price where quantity demanded is equal to quantity supplied.

equilibrium price

Economists refer to the relationship that a higher price leads to a lower quantity demanded as the

law of demand

Any given demand or supply curve is based on the ceteris paribus assumption that __________________.

all else is held equal.

The nature of demand indicates that as the price of a good increases:

buyers desire to purchase less of it.

The term "ceteris paribus" means that:

all variables except those specified are constant.

The downward slope of the demand curve again illustrates the pattern that as ______________ rises, _________________ decreases.

price, quantity demanded

Which of the following would reduce the supply of microcomputers?

higher wage rates for the workers that assemble the computers

The demand schedule for a good:

indicates the quantities that will be purchased at alternative market prices.

Interpret the following statement: "An increase in the price of wheat will encourage farmers to increase the quantity of wheat supplied to the market."

The statement is correct.

A change in price of a good or service typically causes ____________________ for that specific good or service.

a change along the supply curve

_____________ are enacted when discontented sellers, feeling that prices are too low, appeal to legislators to keep prices from falling.

Price floors

________________ refers to the total number of units that are purchased at that price.

quantity demanded

If the price is below the equilibrium level, then the quantity demanded will exceed the quantity supplied. This is known as ________________.

excess demand

When economists talk about supply, they are referring to a relationship between price received for each unit sold and the _________________ .

quantity supplied

In economics, the demand for a good refers to the amount of the good that people:

will buy at various prices.

A supply curve is a graphical illustration of the relationship between price, shown on the vertical axis, and ___________________ , shown on the horizontal axis.

quantity

But nearly all supply curves share a basic similarity: they slope _______________ .

up from left to right

The demand curve for a typical good has a(n):

negative slope because some consumers switch to other goods as the price rises.