Podcast Beta
Questions and Answers
What defines the Giffen goods phenomenon?
In which situation does the law of demand become ineffective?
What effect do changes in fashion have on the law of demand?
What happens when there is a change in price in terms of the demand curve?
Signup and view all the answers
What is one factor that does NOT cause a shift in demand?
Signup and view all the answers
Which situation illustrates the price expectations affecting current demand?
Signup and view all the answers
Which option is a characteristic of shifts in demand?
Signup and view all the answers
Which of the following statements about the Veblen effect is true?
Signup and view all the answers
What causes the demand curve to shift outward?
Signup and view all the answers
Which of the following would NOT cause a decrease in demand?
Signup and view all the answers
What outcome occurs when the demand curve shifts inward?
Signup and view all the answers
Which of the following factors can lead to an increase in supply?
Signup and view all the answers
Which scenario would most likely lead to a decrease in market supply?
Signup and view all the answers
What represents a shift from the demand curve D to D1?
Signup and view all the answers
If a supply curve shifts rightward, it indicates which of the following?
Signup and view all the answers
Which market condition would likely lead to an inward shift of the demand curve?
Signup and view all the answers
What happens to the quantity supplied when the price decreases?
Signup and view all the answers
Which of the following best describes a shift in supply due to non-price factors?
Signup and view all the answers
How is the supply curve represented graphically?
Signup and view all the answers
What term describes the increase in quantity supplied due to a rise in price?
Signup and view all the answers
What does an outward shift of the supply curve indicate?
Signup and view all the answers
What characterizes a market in economic terms?
Signup and view all the answers
What effect does an increase in the price of labor have on the supply of a product?
Signup and view all the answers
What is termed as a decrease in quantity supplied when the price declines?
Signup and view all the answers
How does a change in technology typically affect market supply?
Signup and view all the answers
Which factor does NOT typically cause a shift in the supply curve?
Signup and view all the answers
What occurs to the supply of a good when the price of a substitute good increases?
Signup and view all the answers
What is one effect of an increase in the number of firms within an industry?
Signup and view all the answers
How do taxes or subsidies influence market supply?
Signup and view all the answers
What is a goal of a business firm that can influence market supply?
Signup and view all the answers
Which factor does not typically influence the market supply of a commodity?
Signup and view all the answers
What happens to the quantity supplied when firms face increased production costs?
Signup and view all the answers
What characterizes a market in equilibrium?
Signup and view all the answers
What reflects the equilibrium price in a market?
Signup and view all the answers
What happens at a price above the equilibrium price?
Signup and view all the answers
What effect does excess demand have on market prices?
Signup and view all the answers
How does a change in consumer income typically affect the demand curve?
Signup and view all the answers
What causes a supply curve to shift?
Signup and view all the answers
What is indicated by the intersection of the demand curve and supply curve?
Signup and view all the answers
Which of the following statements is true regarding the role of market prices?
Signup and view all the answers
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.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Related Documents
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.