16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. As globalization and world trade proliferates, individual markets within countries' economies become more competitive. "As the price of gasoline rises, consumer demand decreases. In addition, the quantity demanded of compact cars increased, causing their price to rise." This statement contains two errors: demand and quantity demanded are confused twice. The "Law of diminishing returns" states that as any activity is extended, it eventually becomes increasingly easier to pursue the activity further. For economies that rely on decentralized decision making, the most important decisions are made by the government. A supply curve is negatively sloped, while a demand curve is positively sloped. If given a graph of them both, that will be evidenced by computing each curve's X axis divided by its Y axis when devising a 90-degree angle. A substitute good is a determinant of supply. The law of supply states that there is a direct relationship between price and quantity demanded. In the circular flow model, firms own economic resources, and households buy the manufactured products and services. Households play a dual role of providing the factors of production while purchasing the goods and services of firms. In the production possibilities frontier, a nation's boundary will shift inward if they export more than they import, likely leading to inflationary pressures in the economy. If the international oil price keeps rising, then we can expect the supply curves of products using oil to shift inward to the left. The US. government banned cigarette advertising on the radio and TV in the early 1970's. You would expect to find that, after the ban took effect, the demand for magazine ads for cigarettes increased. Government actions, such as price floors and ceilings, can actually