Podcast
Questions and Answers
What likely happens to the demand curve as a result of an increase in people's income?
What likely happens to the demand curve as a result of an increase in people's income?
- The demand curve shifts to the right. (correct)
- The demand curve remains unchanged.
- The demand curve shifts to the left.
- The demand curve becomes vertical.
If the demand curve shifts rightward due to an increase in income, how is the equilibrium price affected?
If the demand curve shifts rightward due to an increase in income, how is the equilibrium price affected?
- The equilibrium price will decrease.
- The equilibrium price will increase. (correct)
- The equilibrium price will become indeterminate.
- The equilibrium price will remain constant.
What happens to the quantity demanded at the original price P' when income increases?
What happens to the quantity demanded at the original price P' when income increases?
- Quantity demanded fluctuates unpredictably.
- Quantity demanded decreases.
- Quantity demanded increases. (correct)
- Quantity demanded remains the same.
In economic terms, what phenomenon is primarily responsible for the changes in equilibrium caused by an increase in income?
In economic terms, what phenomenon is primarily responsible for the changes in equilibrium caused by an increase in income?
After the income increase, if demand rises significantly, which market condition is most likely to occur eventually?
After the income increase, if demand rises significantly, which market condition is most likely to occur eventually?
What happens when the quantity demanded exceeds the quantity supplied at price P1?
What happens when the quantity demanded exceeds the quantity supplied at price P1?
What behavior do unsatisfied buyers typically exhibit in response to rising demand at price P1?
What behavior do unsatisfied buyers typically exhibit in response to rising demand at price P1?
In a situation of excess demand at price P1, what is the likely response from suppliers?
In a situation of excess demand at price P1, what is the likely response from suppliers?
What is a potential outcome of buyers bidding up the price due to excess demand?
What is a potential outcome of buyers bidding up the price due to excess demand?
What does the imbalance between Q1 and Q2 indicate about market conditions?
What does the imbalance between Q1 and Q2 indicate about market conditions?
What impact does the higher opportunity cost have on consumer behavior?
What impact does the higher opportunity cost have on consumer behavior?
If the suppliers only sell quantity Q1 at price P1 while demand is for quantity Q111, what does this indicate?
If the suppliers only sell quantity Q1 at price P1 while demand is for quantity Q111, what does this indicate?
If suppliers increase production in response to Q1 being less than Q2, what might be a likely market consequence?
If suppliers increase production in response to Q1 being less than Q2, what might be a likely market consequence?
In the scenario where Q2 is greater than Q1, what can be inferred about the relationship between consumer satisfaction and supplier output?
In the scenario where Q2 is greater than Q1, what can be inferred about the relationship between consumer satisfaction and supplier output?
How might suppliers perceive the relationship between production and profits when facing too much supply?
How might suppliers perceive the relationship between production and profits when facing too much supply?
What effect does a tax on suppliers have on the supply curve?
What effect does a tax on suppliers have on the supply curve?
What is a potential consequence of taxing suppliers in a market?
What is a potential consequence of taxing suppliers in a market?
Which of the following best describes the market condition that may arise due to supplier taxes?
Which of the following best describes the market condition that may arise due to supplier taxes?
How does a leftward shift in the supply curve typically impact the market?
How does a leftward shift in the supply curve typically impact the market?
When supplier taxes lead to a leftward shift of the supply curve, what is the immediate effect on market supply?
When supplier taxes lead to a leftward shift of the supply curve, what is the immediate effect on market supply?
What can be inferred about how producers respond to changes in consumer preferences?
What can be inferred about how producers respond to changes in consumer preferences?
How do cheaper substitute resources affect production decisions?
How do cheaper substitute resources affect production decisions?
What role do consumer preferences play in market dynamics?
What role do consumer preferences play in market dynamics?
What is a characteristic of the dynamic market described?
What is a characteristic of the dynamic market described?
In a dynamic market, producers prioritize which of the following?
In a dynamic market, producers prioritize which of the following?
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Study Notes
Market Disequilibrium
- When quantity supplied (Q2) is greater than quantity demanded (Q1), there is an excess supply.
- Consumers will find the product less attractive due to a higher opportunity cost.
- When quantity demanded (Q111) is greater than quantity supplied (Q1), there is excess demand.
- Unsatisfied buyers bid up the price in an attempt to meet their demand.
Market Dynamics
- Producers quickly react to changes in consumer preferences.
- Producers choose cheaper substitute resources in response to market changes.
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