ECON 1 Exam Solution: Price Ceiling, Economic Equilibrium, Price Floor
Document Summary
Economies that use both individual decision making and the behaviors of buyers and sellers to allocate resources are known as: centrally planned economies, market economies, mixed economies, none of the above. An increase in the price of a good causes buyers to buy less of the good and more of substitute goods. This is known as the: income effect, substitution effect, normal good effect, low hanging fruit principle. A supplier is willing to sell a good in the market if: price is greater than opportunity cost, price is greater than average cost, price is greater than total cost, opportunity cost is greater than price. Which of the following factors causes a shift in the supply curve: price of the good, preferences, change in technology, number of buyers in the market. An increase in supply and an increase in demand will result in: equilibrium price increasing, equilibrium quantity increasing, equilibrium price decreasing, equilibrium quantity decreasing.
