42 terms

supply and demand

STUDY
PLAY
change in quantity demanded
moving along the demand curve; change in price
change in demand
shifts left if demand decreases; shifts right when demand increases
law of demand
price increases, quantity demanded decreases; price decreases, quantity demanded increases
demand
the quantity of a good or service that buyers are willing and able to buy at all possible prices during a certain time period
price
the amount of money that buyers pay when they buy a good or service; the amount of money sellers receive when they sell a good or service
quantity demanded
a graphic representation of the law of demand
what happens to price and quantity demanded when there is downward movement along the demand curve?
price decreases and quantity demanded increases
what happens to price and quantity demanded when there is upward movement along the demand curve?
price increases and quantity demanded decreases
when you shift the demand curve to the right, what happens to the quantity demanded at any given price?
quantity demanded increases
supply
the quantity of a good or service that producers are willing and able to offer for sale at each possible price during a given time period
supply curve
when price increases, the quantity supplied increases, and when price decreases, the quantity supplied decreases
market equilibrium
when price increases, the quantity supplied increases, and when price decreases, the quantity supplied decreases
equilibrium price
the price at which quantity supplied and quantity demanded are equal. The point at which the supply and demand curves intersect
price controls
a barrier that prevents a market from reaching equilibrium
price floors
a legal barrier that holds a price above the equilibrium price such as a minimum wage
price ceilings
a legal barrier that holds a price below the equilibrium price such as rent control
law of supply
as the price of a good or service rises, the quantity supplied of that good or service rises. Likewise, as the price of a good or service falls, the quantity supplied of that good or service falls
changes in demand
taste/preferences, income, population, prices of substitutes, consumer expectation
income
income increase = demand of normal goods increases
income decrease = demand of inferior goods decreases
change in quantity demanded
on the curve
change in demand
shift
change in quantity supplied
on or along the curve
change in supply
shift
equilibrium
quantity supplied = quantity demanded
If a good is considered "normal" by economists, an increase in consumers' incomes will result in a decrease in the demand for the good.
false
If the price of peanut butter were to increase, what would likely happen to the demand for jelly?
The demand for jelly would decrease—the demand curve would shift left
A decrease in the price of a good would be illustrated on a supply graph as a:
Movement along the supply curve downward.
If the number of consumers in the market for good A increases, what will happen to the equilibrium price and quantity of good A?
Equilibrium price and quantity will both increase
According to the law of supply, if the price of a good or service increases:
Quantity supplied will increase.
If two goods are complements, an increase in the price of one good will cause a decrease in the demand for the other.
True
If producers expect the price of a good to rise, what will happen to the good's equilibrium price and quantity?
Equilibrium price will increase and equilibrium quantity will decrease
If the price of one of the resources used to produce a good decreases:
The supply curve for that good would shift right.
If consumers expect higher coffee prices in the future:
The demand for coffee will increase now.
An improvement in technology used by producers of a certain good will result in:
An increase in the supply of the good.
If the government decides to subsidize the production of a good, the result would be a decrease in the equilibrium price and a decrease in the equilibrium quantity.
b. False
An increase in the price of a good would be illustrated on a demand graph as a:
Movement along the demand curve upward.
An increase in the average incomes of consumers will result in:
An increase in the demand for goods and services.
When the price of good A rises, people start to drink good B. In this case:
Good B is a substitute good.
A government-imposed price floor, above the equilibrium price, in the market for a good will result in:
A surplus of the good or service.
If the government imposes a tax on the production of a good or service, what will happen to the equilibrium price and quantity of the good?
Equilibrium price will increase and equilibrium quantity will decrease
According to the law of demand, as the price of a good or service increases, the:
Quantity demanded of the good or service will decrease.
If good A is considered to be an inferior good, when incomes rise:
The demand for good A will decrease and the demand curve will shift to the left.
YOU MIGHT ALSO LIKE...