Questions and Answers
What does 'Taste and Preference of Consumers' refer to in demand shifters?
What is the definition of 'Income of Consumers' in demand shifters?
Fiscal/monetary policies, minimum wage, money decides: off brand or regular.
Which of these are examples of related goods in demand shifters?
What refers to 'Expectations of Future Price Changes'?
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The size of population or market can influence demand. For example, Syria's decreasing population due to the __________ War.
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How does technology impact supply?
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Which of the following is an example of inputs affecting supply?
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What does 'Government Intervention, International Events, and Disasters' affect?
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Expectations of future price changes can lead to increased prices of __________, leading to rises in wages.
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What is the impact of 'Related Goods and Resource Costs' on supply?
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How does the number of sellers in the market influence supply?
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Study Notes
Demand Shifters (TIRES)
- Taste and Preference of Consumers: Influenced by celebrity endorsements, brand reputation, and trends; examples include popularity of brands like Lululemon.
- Income of Consumers: Changes in fiscal or monetary policies and minimum wage affect purchasing ability, determining whether consumers opt for off-brand or premium products.
- Related Goods: Includes substitutes (e.g., alternative products) and complements (e.g., products that go together like hot dogs and buns, pens and paper).
- Expectations of Future Price Changes: Anticipation of rising prices prompts consumers to make purchases sooner; for example, college education decisions based on expected future tuition hikes.
- Size of Population/Market: Population decline, such as the situation in Syria due to war, negatively impacts market demand and production capacities, such as oil.
Supply Shifters (TIGERS)
- Technology: Technological advancements typically lead to increased supply; for instance, the cotton gin boosted cotton production, while the complexity of producing advanced technology like new iPhones can slow supply increases.
- Inputs (Natural Resources): The availability of raw materials directly affects supply; for example, the difference in supply potential between mined and lab-grown diamonds is critical.
- Government Intervention, International Events, and Disasters: Natural disasters can alter supply dynamics, such as in cases of sex trafficking rising in disaster-struck areas, indicating shifts in market conditions.
- Expectations of Future Price Changes: Anticipation of price hikes encourages early spending; for instance, rising lumber prices lead to increased house prices, prompting consumers to buy now.
- Related Goods and Resource Costs: Destruction of vanilla crops leads to increased prices and reduced supply among local creameries that rely on vanilla for their products.
- Number of Sellers in the Market: An increase in sellers typically accompanies rising prices; conversely, a decrease in sellers occurs when prices fall, highlighting the responsive nature of supply to market prices.
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Description
This quiz explores the various factors influencing demand and supply in economics. Key topics include consumer preferences, income changes, related goods, future price expectations, and how population size affects market demand. Test your understanding of these critical concepts in market dynamics.
