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Questions and Answers
What is the amount of a product or service that consumers are willing and able to purchase at a given price level, during a certain period of time?
What happens to the demand for a product when its price increases, ceteris paribus?
What is the price at which the demand and supply curves intersect?
What happens to the supply of a product when its price increases, ceteris paribus?
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What is the result when the quantity of a product or service that consumers are willing to buy equals the quantity that producers are willing to supply, at a given price level?
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What is the effect of an increase in demand on the demand curve?
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Study Notes
Demand
- Refers to the amount of a product or service that consumers are willing and able to purchase at a given price level, during a certain period of time.
- Determinants of demand:
- Price of the product
- Income of the consumer
- Prices of related products
- Taste and preferences of the consumer
- Population and demographics
- Law of demand: As the price of a product increases, the demand for it decreases, ceteris paribus (all other things being equal).
Supply
- Refers to the amount of a product or service that producers are willing and able to produce and sell at a given price level, during a certain period of time.
- Determinants of supply:
- Price of the product
- Cost of production
- Technology and production techniques
- Expectations of future prices
- Number of firms in the market
- Law of supply: As the price of a product increases, the supply of it also increases, ceteris paribus (all other things being equal).
Equilibrium
- Occurs when the quantity of a product or service that consumers are willing to buy (demand) equals the quantity that producers are willing to supply, at a given price level.
- Equilibrium price: The price at which the demand and supply curves intersect.
- Equilibrium quantity: The quantity at which the demand and supply curves intersect.
Shifts in Demand and Supply
- Changes in demand:
- Increase in demand: Shifts the demand curve to the right.
- Decrease in demand: Shifts the demand curve to the left.
- Changes in supply:
- Increase in supply: Shifts the supply curve to the right.
- Decrease in supply: Shifts the supply curve to the left.
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Description
Test your knowledge of demand and supply, including the laws of demand and supply, determinants, and equilibrium. Learn how changes in demand and supply affect the market.
