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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 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 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 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?
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?
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?
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.
