ECON 104 (Exam 1) CORRECT ANSWERS
2025
A market in which there are many buyers and sellers, all the products are identical, and there are no
barriers to new sellers entering the market. - correct-answers-Perfectly competitive market
A table showing the relationship between the price of a product and the quantity of the product
demanded. - correct-answers-Demand Schedule
The amount of a good or service that a consumer is willing and able to purchase at a given price. -
correct-answers-Quantity Demanded
A curve that shows the relationship between the price of a product and the quantity of the product
demanded. - correct-answers-Demand Curve
The demand by all the consumers of a given good or service. - correct-answers-Market Demand
The rule that, holding everything else constant, when the price of a product falls, the quantity demanded
of the product will increase, and when the price of a product rises, the quantity demanded of the product
will decrease. - correct-answers-Law of Demand
The change in the quantity demanded of a good that results from a change in price, making the good more
or less expensive relative to other goods that are substitutes. - correct-answers-Substitution Effect
The change in the quantity demanded of a good that results from the effect of a change in the good's price
on consumers' purchasing power. - correct-answers-Income Effect
The requirement that when analyzing the relationship between two variables—such as price and quantity
demanded—other variables must be held constant. - correct-answers-Ceteris paribus ("all else equal")
A good for which the demand increases as income rises and decreases as income falls. - correct-
answers-Normal Good
A good for which the demand increases as income falls and decreases as income rises. - correct-
answers-Inferior Good
, Goods and services that can be used for the same purpose. - correct-answers-Substitutes
Goods and services that are used together. - correct-answers-Complements
5 things that shift market demand - correct-answers-Income, Price of Related Goods,
Tastes, Population and Demographics, Expected Future Prices
The amount of a good or service that a firm is willing and able to supply at a given price. - correct-
answers-Quantity supplied
A table that shows the relationship between the price of a product and the quantity of the product
supplied. - correct-answers-Supply Schedule
A curve that shows the relationship between the price of a product and the quantity of the product
supplied. - correct-answers-Supply Curve
The rule that, holding everything else constant, increases in price cause increases in the quantity supplied,
and decreases in price cause decreases in the quantity supplied. - correct-answers-Law of supply
5 things that shift supply - correct-answers-Price of Inputs, Technological Change, Price of Substitutes in
production, Number of Firms, Expected Future Prices
A situation in which quantity demanded equals quantity supplied. - correct-answers-Market
equilibrium
A market equilibrium with many buyers and many sellers. - correct-answers-Competitive
market equilibrium
A situation in which the quantity supplied is greater than the quantity demanded. - correct-answers-
Surplus
A situation in which the quantity demanded is greater than the quantity supplied. - correct-answers-
Shortage
A legally determined maximum price that sellers may charge. - correct-answers-Price ceiling
A legally determined minimum price that sellers may receive. - correct-answers-Price floor
2025
A market in which there are many buyers and sellers, all the products are identical, and there are no
barriers to new sellers entering the market. - correct-answers-Perfectly competitive market
A table showing the relationship between the price of a product and the quantity of the product
demanded. - correct-answers-Demand Schedule
The amount of a good or service that a consumer is willing and able to purchase at a given price. -
correct-answers-Quantity Demanded
A curve that shows the relationship between the price of a product and the quantity of the product
demanded. - correct-answers-Demand Curve
The demand by all the consumers of a given good or service. - correct-answers-Market Demand
The rule that, holding everything else constant, when the price of a product falls, the quantity demanded
of the product will increase, and when the price of a product rises, the quantity demanded of the product
will decrease. - correct-answers-Law of Demand
The change in the quantity demanded of a good that results from a change in price, making the good more
or less expensive relative to other goods that are substitutes. - correct-answers-Substitution Effect
The change in the quantity demanded of a good that results from the effect of a change in the good's price
on consumers' purchasing power. - correct-answers-Income Effect
The requirement that when analyzing the relationship between two variables—such as price and quantity
demanded—other variables must be held constant. - correct-answers-Ceteris paribus ("all else equal")
A good for which the demand increases as income rises and decreases as income falls. - correct-
answers-Normal Good
A good for which the demand increases as income falls and decreases as income rises. - correct-
answers-Inferior Good
, Goods and services that can be used for the same purpose. - correct-answers-Substitutes
Goods and services that are used together. - correct-answers-Complements
5 things that shift market demand - correct-answers-Income, Price of Related Goods,
Tastes, Population and Demographics, Expected Future Prices
The amount of a good or service that a firm is willing and able to supply at a given price. - correct-
answers-Quantity supplied
A table that shows the relationship between the price of a product and the quantity of the product
supplied. - correct-answers-Supply Schedule
A curve that shows the relationship between the price of a product and the quantity of the product
supplied. - correct-answers-Supply Curve
The rule that, holding everything else constant, increases in price cause increases in the quantity supplied,
and decreases in price cause decreases in the quantity supplied. - correct-answers-Law of supply
5 things that shift supply - correct-answers-Price of Inputs, Technological Change, Price of Substitutes in
production, Number of Firms, Expected Future Prices
A situation in which quantity demanded equals quantity supplied. - correct-answers-Market
equilibrium
A market equilibrium with many buyers and many sellers. - correct-answers-Competitive
market equilibrium
A situation in which the quantity supplied is greater than the quantity demanded. - correct-answers-
Surplus
A situation in which the quantity demanded is greater than the quantity supplied. - correct-answers-
Shortage
A legally determined maximum price that sellers may charge. - correct-answers-Price ceiling
A legally determined minimum price that sellers may receive. - correct-answers-Price floor
