1. typically slopes downward 2. measurement of how sensitive producers are to a change
in price
3. point where Qd = Os
4. a chart of demand
5. will shift the supply curve to the right
6. represents a point on the supply curve
7. market situation where Os > Qd
8. amount of goods/services producers are willing and able
to provide at various prices during a given period of time
9. situation where a change in price will result in a SMALLER
change in the quantity supplied
10. will shift the demand curve to the left
11. term which describes the relationship between price and
quantity demanded
12. a chart of supply
13. measurement of sensitive consumers are to a change in
price
14. represents a point on the demand curve
15. amount of goods/services consumers are willing and able
to purchase at various prices during a given period of time
16. market situation where Qd > Os
17. a situation where a change in price will lead to a BIGGER
change in the quantity demanded
18. points where Qd and Qs are not equal
19. typically slopes upward
20. term which describes the relationship between price and
quantity supplied

Goods and services that can be used for the same purpose are and goods and services that are used together are

Consider the local telephone company, a natural monopoly. the following graph shows the monthly demand curve for phone services and the company’s marginal revenue (mr), marginal cost (mc), and average total cost (atc) curves. 0 2 4 6 8 10 12 14 16 18 20 100 90 80 70 60 50 40 30 20 10 0 price (dollars per subscription) quantity (thousands of subscriptions) d mr mc atc 8, 60 suppose that the government has decided not to regulate this industry, and the firm is free to maximize profits, without constraints. complete the first row of the following table. pricing mechanism short run long-run decision quantity price profit (subscriptions) (dollars per subscription) profit maximization marginal-cost pricing average-cost pricing suppose that the government forces the monopolist to set the price equal to marginal cost. complete the second row of the previous table. suppose that the government forces the monopolist to set the price equal to average total cost. complete the third row of the previous table. under average-cost pricing, the government will raise the price of output whenever a firm’s costs increase, and lower the price whenever a firm’s costs decrease. over time, under the average-cost pricing policy, what will the local telephone company most likely do

Which statement best explains the relationship between points a and b? a. consumption reaches its highest point, and then supply begins to fall. b. inflation reaches its highest point, and then the economy begins to expand. c. production reaches its highest point, and then the economy begins to contract. d. unemployment reaches its highest point, and then inflation begins to decrease.