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Questions and Answers
What defines the Giffen goods phenomenon?
What defines the Giffen goods phenomenon?
- Demand fluctuates with changes in consumer income.
- Demand remains unchanged regardless of price.
- Demand decreases as the price increases.
- Demand increases as the price increases. (correct)
In which situation does the law of demand become ineffective?
In which situation does the law of demand become ineffective?
- During emergencies or calamities. (correct)
- When the price of goods is constant.
- When there are no substitutes available.
- When consumers have stable preferences.
What effect do changes in fashion have on the law of demand?
What effect do changes in fashion have on the law of demand?
- They can lead to higher demand for trendy goods, regardless of price. (correct)
- They dictate that lower prices automatically boost demand.
- They consistently decrease the demand for all types of goods.
- They always increase the demand for lower-priced items.
What happens when there is a change in price in terms of the demand curve?
What happens when there is a change in price in terms of the demand curve?
What is one factor that does NOT cause a shift in demand?
What is one factor that does NOT cause a shift in demand?
Which situation illustrates the price expectations affecting current demand?
Which situation illustrates the price expectations affecting current demand?
Which option is a characteristic of shifts in demand?
Which option is a characteristic of shifts in demand?
Which of the following statements about the Veblen effect is true?
Which of the following statements about the Veblen effect is true?
What causes the demand curve to shift outward?
What causes the demand curve to shift outward?
Which of the following would NOT cause a decrease in demand?
Which of the following would NOT cause a decrease in demand?
What outcome occurs when the demand curve shifts inward?
What outcome occurs when the demand curve shifts inward?
Which of the following factors can lead to an increase in supply?
Which of the following factors can lead to an increase in supply?
Which scenario would most likely lead to a decrease in market supply?
Which scenario would most likely lead to a decrease in market supply?
What represents a shift from the demand curve D to D1?
What represents a shift from the demand curve D to D1?
If a supply curve shifts rightward, it indicates which of the following?
If a supply curve shifts rightward, it indicates which of the following?
Which market condition would likely lead to an inward shift of the demand curve?
Which market condition would likely lead to an inward shift of the demand curve?
What happens to the quantity supplied when the price decreases?
What happens to the quantity supplied when the price decreases?
Which of the following best describes a shift in supply due to non-price factors?
Which of the following best describes a shift in supply due to non-price factors?
How is the supply curve represented graphically?
How is the supply curve represented graphically?
What term describes the increase in quantity supplied due to a rise in price?
What term describes the increase in quantity supplied due to a rise in price?
What does an outward shift of the supply curve indicate?
What does an outward shift of the supply curve indicate?
What characterizes a market in economic terms?
What characterizes a market in economic terms?
What effect does an increase in the price of labor have on the supply of a product?
What effect does an increase in the price of labor have on the supply of a product?
What is termed as a decrease in quantity supplied when the price declines?
What is termed as a decrease in quantity supplied when the price declines?
How does a change in technology typically affect market supply?
How does a change in technology typically affect market supply?
Which factor does NOT typically cause a shift in the supply curve?
Which factor does NOT typically cause a shift in the supply curve?
What occurs to the supply of a good when the price of a substitute good increases?
What occurs to the supply of a good when the price of a substitute good increases?
What is one effect of an increase in the number of firms within an industry?
What is one effect of an increase in the number of firms within an industry?
How do taxes or subsidies influence market supply?
How do taxes or subsidies influence market supply?
What is a goal of a business firm that can influence market supply?
What is a goal of a business firm that can influence market supply?
Which factor does not typically influence the market supply of a commodity?
Which factor does not typically influence the market supply of a commodity?
What happens to the quantity supplied when firms face increased production costs?
What happens to the quantity supplied when firms face increased production costs?
What characterizes a market in equilibrium?
What characterizes a market in equilibrium?
What reflects the equilibrium price in a market?
What reflects the equilibrium price in a market?
What happens at a price above the equilibrium price?
What happens at a price above the equilibrium price?
What effect does excess demand have on market prices?
What effect does excess demand have on market prices?
How does a change in consumer income typically affect the demand curve?
How does a change in consumer income typically affect the demand curve?
What causes a supply curve to shift?
What causes a supply curve to shift?
What is indicated by the intersection of the demand curve and supply curve?
What is indicated by the intersection of the demand curve and supply curve?
Which of the following statements is true regarding the role of market prices?
Which of the following statements is true regarding the role of market prices?
Study Notes
Factors Affecting Demand Changes
- Changes in non-price factors influence shifts in demand.
- These factors include income, population, government policies, tastes, preferences, habits, and fashion.
- Favorable changes in these factors shift the demand curve outward, leading to an increase in demand.
- Unfavorable changes in these factors shift the demand curve inward, leading to a decrease in demand.
Factors Affecting Supply Changes
- Costs of production, government policies, and technology influence shifts in supply.
- Favorable changes in these factors shift the supply curve outward, leading to an increase in supply.
- Unfavorable changes in these factors shift the supply curve inward, leading to a decrease in supply.
The Market
- The market acts as a mechanism for buyers and sellers to interact.
- The market doesn't always need to be a physical space.
- Online shopping is an example of a virtual market.
- The market for a particular commodity is composed of all buyers and sellers.
Market Equilibrium
- Equilibrium occurs when market demand equals market supply.
- This point is characterized by the equilibrium price and equilibrium quantity.
Equilibrium Price
- The price at which demand and supply are balanced is known as the Equilibrium Price.
- This price remains stable until changes in factors affecting demand and supply occur.
Equilibrium Quantity
- Equilibrium quantity represents the amount bought and sold at the equilibrium price.
Excess Demand and Supply
- When the price is above the equilibrium price, there is excess supply.
- When the price is below the equilibrium price, there is excess demand.
- Market prices play a crucial role in achieving market equilibrium.
- Excess demand encourages higher supply and lower demand.
- Excess supply encourages lower supply and higher demand.
Change in Demand and Supply
- Shifts in demand and supply curves occur due to changes in non-price factors.
- An individual's demand curve shifts based on changes in income, prices of other commodities, and preferences.
- The market demand curve shifts correspondingly.
- The supply curve shifts due to changes in technology and prices of factors of production.
Supply Curve
- The supply curve describes the relationship between price and quantity supplied.
- It is upward sloping, meaning that as price increases, quantity supplied increases.
Movement along the Demand/Supply Curve
- Changes in price cause a movement along the demand/supply curve, affecting quantity demanded/supplied, but not demand/supply itself.
- Increasing prices lead to expansion in supply or contraction in demand, while decreasing prices lead to contraction in supply or expansion in demand.
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Description
Explore the vital factors that influence demand and supply in this quiz. Learn how changes in income, government policies, and technology can shift demand and supply curves, impacting market dynamics. Test your understanding of market mechanisms and their implications.
