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Questions and Answers
What happens when the quantity supplied exceeds the quantity demanded?
What happens when the quantity supplied exceeds the quantity demanded?
There is a surplus.
What do suppliers do to eliminate a surplus?
What do suppliers do to eliminate a surplus?
What is true at the equilibrium price for gasoline?
What is true at the equilibrium price for gasoline?
Everyone with the desire and income to buy gasoline can do so, and all sellers willing and able to sell can do so.
Which of the following would increase the quantity of LCD TVs demanded but would not increase the demand for LCD TVs?
Which of the following would increase the quantity of LCD TVs demanded but would not increase the demand for LCD TVs?
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What does the demand schedule for a good indicate?
What does the demand schedule for a good indicate?
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If the price of music downloads decreases, what is most likely to occur?
If the price of music downloads decreases, what is most likely to occur?
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What does a decrease in supply mean for producers?
What does a decrease in supply mean for producers?
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What will happen if consumer incomes decrease?
What will happen if consumer incomes decrease?
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In economics, what does the demand for a good refer to?
In economics, what does the demand for a good refer to?
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What does an upward-sloping supply curve indicate?
What does an upward-sloping supply curve indicate?
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If the price of Good A decreases, what happens to the demand for Good B?
If the price of Good A decreases, what happens to the demand for Good B?
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What does a supply schedule show?
What does a supply schedule show?
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What does the market supply schedule reflect?
What does the market supply schedule reflect?
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Which of the following would NOT cause a change in the supply of milk?
Which of the following would NOT cause a change in the supply of milk?
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Which of the following would not shift the supply curve for swordfish?
Which of the following would not shift the supply curve for swordfish?
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What is the difference between a change in quantity supplied and a change in supply?
What is the difference between a change in quantity supplied and a change in supply?
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What does the law of demand state?
What does the law of demand state?
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If the price of tennis rackets were to increase, what is expected?
If the price of tennis rackets were to increase, what is expected?
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What does each point on the supply curve show?
What does each point on the supply curve show?
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What does the supply curve show?
What does the supply curve show?
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Which of the following is most likely to be an inferior good?
Which of the following is most likely to be an inferior good?
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What is true of a competitive market?
What is true of a competitive market?
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A change in which of the following variables does not cause a change in demand?
A change in which of the following variables does not cause a change in demand?
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What would likely cause a reduction in the supply of Nintendo video games?
What would likely cause a reduction in the supply of Nintendo video games?
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When there is an excess quantity supplied of a product at the current price, what must be true?
When there is an excess quantity supplied of a product at the current price, what must be true?
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Which of the following describes equilibrium in a market?
Which of the following describes equilibrium in a market?
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What happens if vacancy rates in an apartment complex increase?
What happens if vacancy rates in an apartment complex increase?
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When there is an excess quantity demanded of a product at the current price, what happens?
When there is an excess quantity demanded of a product at the current price, what happens?
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What does it mean if a shortage exists in the market for strawberries?
What does it mean if a shortage exists in the market for strawberries?
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What is incorrect about the statement: 'Demand exceeds the available quantity of apartment housing'?
What is incorrect about the statement: 'Demand exceeds the available quantity of apartment housing'?
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If weather conditions destroy a substantial portion of the available coffee crop, what is the likely outcome?
If weather conditions destroy a substantial portion of the available coffee crop, what is the likely outcome?
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If there is a surplus, ____ will be frustrated by their inability to exchange at the current price, and they will ____ the prices as a result.
If there is a surplus, ____ will be frustrated by their inability to exchange at the current price, and they will ____ the prices as a result.
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Study Notes
Demand Schedule and Curve
- A demand schedule displays quantities of a good purchased at various market prices, holding other factors constant (ceteris paribus).
- A decrease in the price of a good leads to an increase in quantity demanded, as illustrated by the Law of Demand, which describes the inverse relationship between price and quantity demanded.
- A shift in the demand curve occurs only due to changes in factors other than the price, such as income, tastes, and prices of related goods.
Supply Schedule and Curve
- A supply schedule outlines how many units producers are willing to sell at different prices, adhering to the Law of Supply, where higher prices typically lead to increased quantity supplied.
- A decrease in supply is indicated by a leftward shift of the supply curve, resulting from factors like increased input prices, higher prices for substitutes in production, or expectations of future price increases.
- Differentiating between quantity supplied (affected by a price change) and supply (affected by other variables) is crucial; a shift in demand or supply curves indicates changes due to these factors.
Market Equilibrium
- At market equilibrium, quantity demanded equals quantity supplied. Deviations from this equilibrium create surpluses or shortages.
- A surplus occurs when quantity supplied exceeds quantity demanded, prompting sellers to lower prices to stimulate sales.
- Conversely, a shortage happens when quantity demanded exceeds quantity supplied, leading to upward pressure on prices as consumers bid for limited goods.
Complementary and Substitute Goods
- Complementary goods see an increase in demand for one when the price decreases for the other (e.g., tennis rackets and tennis balls).
- Substitute goods result in increased demand for one when the price rises for the other (e.g., coffee and tea).
Inferior and Normal Goods
- Inferior goods experience decreased demand when consumer incomes rise; used clothing is an example.
- Normal goods see increased demand as consumer incomes rise.
Competitive Markets
- Competitive markets have numerous buyers and sellers with little market power, resulting in prices determined by supply and demand dynamics.
- Changes in the prices of unrelated goods do not impact the demand for a specific product, while changes in substitutes or complements do affect demand.
Responses to Price Changes
- A decrease in price generally increases the quantity demanded but does not shift the demand curve itself.
- Input cost increases, such as for computer chips in video games, typically lead to a decrease in supply due to raised production costs.
Summary of Economic Principles
- Understanding the difference between demand and quantity demanded, as well as supply and quantity supplied, is essential for analyzing market behavior.
- Tying in these concepts with real-world examples illustrates the dynamics of consumer behavior in response to price changes and market conditions.
Studying That Suits You
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Description
This quiz consists of flashcards covering key terms from Chapter 3 of economics. Each card presents a word along with its definition, aiding in understanding important concepts related to demand schedules and pricing. Ideal for students looking to reinforce their economic vocabulary.
