Question

16. Inferior goods have ________________ income elasticity’s and normal goods have ______________________ income elasticity’s of demand.

17. The equilibrium price: is the price where quantity _____________________ is equal to quantity ______________.

18. A shortage occurs when the quantity ____________________ is greater than the quantity __________________.

19. A shortage can only occur when the market price is ________________ the equilibrium price.

20. A surplus occurs when the quantity ________________ is greater than the quantity ___________________.

21. A surplus can only occur when the market price is ____________________ the equilibrium price.

22. A decrease in Supply shifts Supply to the ____________ resulting in a ______________ in the equilibrium price and a ______________ in the equilibrium quantity.

23. An increase in Supply and Demand will result in a _____________________ in the equilibrium quantity but the price may __________________________________________.

24. The Law of Demand is a result of the ________________ and ________________ effects.

25. If there were an increase in the market size we would expect the market Demand to ______________, shifting Demand to the _____________, causing the equilibrium ______________ and _______________________ to increase.

26. An increase in the price will increase total revenue when the elasticity of demand is _____________________.

27. If Demand decreases but Supply increases the market-clearing price will ___________________ and the quantity will ____________________________________________?

28. If income levels increase and the Demand for good a decreases it must be the good A is a _____________________ good.

29. The more time suppliers have to respond to a change in the market-clearing price the more ___________________ Supply will be.

30. A price floor means that the market price cannot _________________ that price.

31. A price ceiling means that the market price cannot _________________ that price.

32. If CMU tuition increased we should expect enrollment to _______________ because of the _______ of ___________.

Answer 1

16. Inferior goods have negative income elasticity’s and normal goods have positive income elasticity’s of demand.

17. The equilibrium price: is the price where the quantity demanded is equal to quantity supply.

18. A shortage occurs when the quantity demand is greater than the quantity supply.

19. A shortage can only occur when the market price is below the equilibrium price.

20. A surplus occurs when the quantity supply is greater than the quantity demand.

21. A surplus can only occur when the market price is above the equilibrium price.

22. A decrease in Supply shifts Supply to the left resulting in an increase in the equilibrium price and a decrease in the equilibrium quantity.

23. An increase in Supply and Demand will result in an increase in the equilibrium quantity but the price may either increase decrease or remain unchanged.

24. The Law of Demand is a result of the substitution effect and income effects.

25. If there were an increase in the market size we would expect the market Demand to increase, shifting Demand to the right, causing the equilibrium price and quantity to increase.

26. An increase in the price will increase total revenue when the elasticity of demand is inelastic.

27. If Demand decreases but Supply increases the market-clearing price will increase and the quantity will either increase, decrease or remains constant.

28. If income levels increase and the Demand for good a decreases it must be the good A is an inferior good.

29. The more time suppliers have to respond to a change in the market-clearing price the more inelastic Supply will be.

30. A price floor means that the market price cannot be lower than that price.

31. A price ceiling means that the market price cannot be higher than that price.

32. If CMU tuition increased we should expect enrollment to decrease because of the law of demand.