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Questions and Answers
What does a demand schedule represent?
What does a demand schedule represent?
- The amount of product a household is willing to buy at various prices (correct)
- The total sales revenue at different prices
- The production costs associated with different quantities
- The supply curve for a specific good
How is a demand curve typically obtained?
How is a demand curve typically obtained?
- From a demand schedule (correct)
- From market equilibrium data
- From a supply schedule
- By calculating total demand across all households
What does a demand curve illustrate?
What does a demand curve illustrate?
- How demand would change if income levels change
- How much supply would exceed demand at all prices
- Relationship between prices and production levels
- The quantity of a product a household would buy at different prices (correct)
What kind of data would you expect to find in a demand schedule?
What kind of data would you expect to find in a demand schedule?
Which of the following statements about the law of demand is true?
Which of the following statements about the law of demand is true?
What condition exists when quantity supplied exceeds quantity demanded at the current price?
What condition exists when quantity supplied exceeds quantity demanded at the current price?
What typically happens to price when there is excess supply?
What typically happens to price when there is excess supply?
Higher demand generally leads to which of the following outcomes?
Higher demand generally leads to which of the following outcomes?
What is the result of lower demand, according to the principles of economics?
What is the result of lower demand, according to the principles of economics?
How do relative magnitudes of change in supply and demand affect market equilibrium?
How do relative magnitudes of change in supply and demand affect market equilibrium?
What occurs when both supply and demand increase?
What occurs when both supply and demand increase?
What is a likely consequence of lower supply in the market?
What is a likely consequence of lower supply in the market?
In a scenario of excess supply, what is the likely market reaction?
In a scenario of excess supply, what is the likely market reaction?
What leads to a change in quantity supplied?
What leads to a change in quantity supplied?
What causes a shift in the supply curve?
What causes a shift in the supply curve?
How is market supply defined?
How is market supply defined?
What does market equilibrium indicate?
What does market equilibrium indicate?
Which statement about individual supply curves is correct?
Which statement about individual supply curves is correct?
What happens if there is a change in consumer preferences?
What happens if there is a change in consumer preferences?
What does a rightward shift of the supply curve indicate?
What does a rightward shift of the supply curve indicate?
Which of the following does NOT affect the supply of a good?
Which of the following does NOT affect the supply of a good?
What causes a movement along the supply curve?
What causes a movement along the supply curve?
What occurs when supply changes due to factors other than price?
What occurs when supply changes due to factors other than price?
Which of the following best describes the effect of a technological change in production?
Which of the following best describes the effect of a technological change in production?
What does a shift from supply curve S_A to S_B indicate?
What does a shift from supply curve S_A to S_B indicate?
Which of the following scenarios would NOT result in a shift of the supply curve?
Which of the following scenarios would NOT result in a shift of the supply curve?
What would likely happen to the supply curve if new seeds that increase soybean yield are introduced?
What would likely happen to the supply curve if new seeds that increase soybean yield are introduced?
What is a result of a higher price in relation to the supply curve?
What is a result of a higher price in relation to the supply curve?
Which of the following factors causes an entirely new supply curve to be established?
Which of the following factors causes an entirely new supply curve to be established?
What does the law of supply state about the relationship between price and quantity supplied?
What does the law of supply state about the relationship between price and quantity supplied?
What is the typical shape of a supply curve?
What is the typical shape of a supply curve?
Which factor does NOT influence the cost of producing a good?
Which factor does NOT influence the cost of producing a good?
What type of relationship between price and quantity supplied is represented by supply curves?
What type of relationship between price and quantity supplied is represented by supply curves?
Which of the following is considered a determinant of supply?
Which of the following is considered a determinant of supply?
What typically happens to the quantity supplied as the price increases?
What typically happens to the quantity supplied as the price increases?
Which of the following statements is true regarding supply curves?
Which of the following statements is true regarding supply curves?
What effect does technology have on the supply of a product?
What effect does technology have on the supply of a product?
Study Notes
Excess Supply/Surplus
- Occurs when the quantity supplied of a good exceeds the quantity demanded at the current price.
- When this happens, the price tends to fall until equilibrium is restored.
Changes in Equilibrium
- Higher Demand: Leads to higher equilibrium price and quantity.
- Higher Supply: Leads to lower equilibrium price, but higher equilibrium quantity.
- Lower Demand: Leads to lower equilibrium price and quantity.
- Lower Supply: Leads to higher equilibrium price and lower equilibrium quantity.
Relative Magnitudes of Change in Supply and Demand
- The relative magnitudes of change in supply and demand determine the outcome of market equilibrium.
- When supply and demand both increase, quantity will increase, but price may go up or down.
Price and Quantity Demanded: The Law of Demand
- A demand schedule is a table showing how much of a given product a household would be willing to buy at different prices.
- Demand curves, usually derived from demand schedules, show how much of a product a household would be willing to buy at different prices.
Price and Quantity Supplied: The Law of Supply
- A supply curve shows how much of a product a firm will supply per period of time at different prices.
- The law of supply states that there is a positive relationship between price and quantity of a good supplied. This means supply curves typically have a positive slope.
Other Determinants of Supply
- The price of the good or service.
- The cost of producing the good, which depends on:
- The price of required inputs (labor, capital, and land).
- The technologies that can be used to produce the product.
- The prices of related products.
Shift of Supply Versus Movement Along a Supply Curve
- A higher price causes higher quantity supplied, resulting in a movement along the supply curve.
- A change in determinants of supply other than price causes an increase in supply, or a shift of the entire supply curve.
Market Supply
- Market supply is the sum of all the quantities of a good or service supplied per period by all the firms selling in the market for that good or service.
- Market supply is the horizontal summation of individual firms' supply curves.
Market Equilibrium
- Market equilibrium occurs when quantity supplied and quantity demanded are equal.
- At equilibrium, there is no tendency for the market price to change.
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Description
This quiz focuses on the concepts of excess supply, changes in equilibrium, and the law of demand. Understand how different factors affecting supply and demand influence market prices and quantities. Test your knowledge on equilibrium restoration and the effects of demand schedules.
