The quantity of a good that people want to buy at a given price during a specific period of time
The law of demand states that a quantity demanded of a good in a market ______ as its price ______
The demand curve slopes downward from left to right because the quantity demanded is ______ related to price
Consumer preferences, consumer information, consumers incomes, number of consumers in the market, consumers expectations of future prices, prices of closely related goods
What causes shifts in the demand curve?
If a sufficient number of demanders expect the price of the good to increase in the future, these people will ______ increase their demand of the product today in order to stock up on the good and avoid the higher price in the future.
If a sufficient number of demanders think the price will decline tomorrow, the demand today will ________
As the number of demanders in the market or population increases the demand for the good ______
When the quantity demanded changes as a result of a change in the price of the good
When does movement along the demand curve occur?
A shift in the demand curve occurs if there is a change that is due to any source except the ______
decreases (shift to the left)
As the prices of factors increase, the costs of production increases, and supply _______
increase (shift to the right)
If factor prices decline, then it is cheaper to produce and supply will _______
Assume Good A and Good B are substitutes in production. As the price of Good B increases, the supply of Good A will _____ as suppliers shift production into Good B
Technology, prices of related goods, expected future prices number of producers
What effects the supply curve?
An improvement in technology reduces the amount of factors of production required to produce a given amount of output. Therefore, an improve in technology will reduce the cost of production and lead to an ________ in supply
increase, increase, increase
Assume Good A and Good B are complements in production. If the price of Good B increases, the supply of Good A will _____. When the price of Good B _____, the quantity of Good B supplied also ________
quantity supplied changes as a result of a change in the price of the good
Movement along the supply curve occurs when the
When there is a shortage, a higher price ______ the quantity demanded and _____ the quantity supplied to eliminate the shortage
When there is a surplus, a lower price _______ the quantity demanded and _______ the quantity supplied to eliminate the surplus
An increase in demand _____ the equilibrium price, and ______ equilibrium quantity
If both supply and demand increase, then the equilibrium quantity will ________. If supply shifts more than demand, the equilibrium price will _______
If both supply and demand increase, then the equilibrium quantity will ________. If demand shifts more than supply, the equilibrium price will _______
If both supply and demand decline simultaneously then equilibrium quantity will ______. If demand decreases more than supply, the equilibrium price will ________
If both supply and demand decline simultaneously then equilibrium quantity will ______. If supply declines more than demand, the equilibrium price will ________
If supply increases and demand decreases simultaneously, then equilibrium price will ______. If the decrease in demand is more than the increase in supply, the quantity _______
If supply increases and demand decreases simultaneously, then equilibrium price will ______. If the decrease in demand is less than the increase in supply, the quantity ______
If supply decreases while demand increases then price will _____. If the decrease in supply is more than the increase in demand, then equilibrium quantity will ______
If supply decreases while demand increases then price will _____. If the increase in demand is more than the increase in demand, then equilibrium quantity will _______.
to help consumers in situations where the government thinks that the equilibrium price is too high
What's the purpose of a price ceiling?
to help suppliers of good and services in situations where the government feels that the equilibrium price is "too low"
What's the purpose of price floors?
shortages, long lines for goods, black markets, reduction in quality of goods
What are side effects of price ceilings?
When there are price ceilings, the quantity demanded is more or less than the quantity supplied?
quantity demanded, price of that good
The price elasticity of demand is the percentage change in the ____________ of a good divided by the percentage change in the ______ of that good
quantity demanded, price.
The price elasticity of demand is a measure of the sensitivity of the _________ of a good to the ______ of the good
If the price elasticity of demand for contact lenses is high, than the quantity of contact lenses demanded by people changes by a ____ amount when the price changes
If the price elasticity of demand for bread is low, than the quantity of bread demanded changes by a _____ amount when the price of bread changes
if there's a relatively flat line, this shows that the quantity demanded is ______sensitive to the price
If there's a demand curve with a relatively flat curve, then there is a _____ price elasticity of demand
If a product has several substitutes, then an increase in price will lead to a relatively large decrease in quantity demanded as consumers switch to substitutes, implying a relatively _______ demand
If a good does not have many substitutes, a price change does not change quantity demanded very much, implying a relatively ________ demand.
The greater the share of your income spent on a good, the more [elastic or inelastic] the demand?
Because a small percentage increase in price can take a big bite out of a household's discretionary income and cause the household to reconsider how they will spend their money
Why would a greater share of income spent on a good mean the demand for that good is elastic?
As time passes, it is more likely that a substitute can be found for the good.
Why does a longer price change in place make demand more elastic?
If demand is inelastic a price increase will correlate with an ________ in industry revenue
If a one percent change in price causes less than a one percent decline in quantity demanded, then demand is relatively ________ and the price change will cause an _______ in the industry's total revenue
If a one percent change in price corresponds with a greater than one percent change in quantity demanded, then demand is relatively _______ and the price change will cause a _____ in industry total revenues
Whether or not the income elasticity of demand is positive or negative depends upon whether the product is ______ or ______
The price elasticity of supply is _____ because the law of supply implies a _____ relationship between price and quantity supplied
technology used to produce the good and length of time during which the price change is in place
Two things affect the price elasticity of supply