Questions and Answers
What is the most significant factor that can shift the demand curve in response to a change in consumer tastes?
Preferences
Which of the following factors is NOT a reason for a shift in the supply curve?
The number of buyers
What would cause a shift in the supply curve if the cost of production increases due to a rise in the price of raw materials?
Prices of Resources
Which of the following factors would cause a shift in both the demand and supply curves?
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What would cause a shift in the supply curve if the government imposes a tax on a particular product?
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Study Notes
Demand Curve Shifters
- Income: Changes in consumer income shift the demand curve, as higher income increases purchasing power
- Preferences: Shifts in consumer preferences, such as changes in tastes or attitudes, influence demand
- Prices of Related Goods: Changes in prices of complementary or substitute goods affect demand
- The Number of Buyers: An increase in the number of buyers in the market shifts the demand curve
- Expectations for Future Prices: If consumers expect prices to rise, they may buy more now, shifting the curve
Supply Curve Shifters
- Prices of Resources: Changes in the cost of production, such as labor or raw materials, shift the supply curve
- Technology: Improvements in production technology increase efficiency, lowering costs and shifting the supply curve
- Prices of Related Goods: Changes in prices of related goods, such as substitutes or complements, affect supply
- The Number of Sellers: An increase in the number of suppliers in the market shifts the supply curve
- Expectation of Future Price: If producers expect prices to rise, they may supply more now, shifting the curve
- Taxes and Subsidies: Government policies, such as taxes or subsidies, influence production costs and shift the supply curve
- Government Restrictions: Regulations and restrictions, such as quotas or licensing, limit production and shift the supply curve
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