Macro Chapter 3

Which term describes a place where buyers and sellers interact to exchange goods and services?

• Market

• Surplus

• Price ceiling

• Substitution effect

What does the demand curve show in economics?

• The relationship between price and quantity demanded

• The total revenue of a firm

• The cost of production at each output level

• The number of sellers in a market

Which effect occurs when consumers switch to a cheaper alternative as the price of a good rises?

• Substitution effect

• Income effect

• Surplus effect

• Price ceiling effect

What is the income effect?

• The change in quantity demanded due to a change in consumers' purchasing power

• The change in supply due to a change in input prices

• The change in demand due to a change in population

• The change in price due to a change in technology

What is a buyer's reservation price?

• The maximum price a buyer is willing to pay for a good

• The minimum price a seller will accept

• The equilibrium price in the market

• The price set by the government

Which curve shows the relationship between the price of a good and the quantity supplied?

• Supply curve

• Demand curve

• Equilibrium curve

• Surplus curve

What is a seller's reservation price?

• The lowest price a seller is willing to accept for a good

• The highest price a buyer will pay

• The market equilibrium price

• The price at which surplus occurs

What is equilibrium in a market?

• The point where quantity demanded equals quantity supplied

• The point where demand exceeds supply

• The point where supply exceeds demand

• The point where prices are fixed by the government

What is a surplus in economic terms?

• When quantity supplied exceeds quantity demanded at a given price

• When quantity demanded exceeds quantity supplied at a given price

• When the market is in equilibrium

• When prices are below the equilibrium

What is a price ceiling?

• A legal maximum price that can be charged for a good

• A legal minimum price that can be charged for a good

• The equilibrium price in a market

• The price at which surplus occurs