Week 3: Supply & Demand

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Questions and Answers

Which factor does not shift the demand curve?

A change in technology (correct)

A change in income

A change in the number of consumers

A change in tastes

What is represented by a demand curve?

The surplus amount at various prices

The equilibrium price at each quantity

The quantity demanded at each price (correct)

The quantity supplied at each price

When economists reference an increase in supply, they mean:

A decrease in the equilibrium quantity

A movement along the supply curve

A shift of the supply curve to the right (correct)

A decrease in quantity supplied at each price

Which of the following is a characteristic of equilibrium price?

It is the price at which quantity demanded equals quantity supplied Signup and view all the answers

What results from a surplus in the market?

Prices decrease Signup and view all the answers

Which of the following can cause a demand curve to shift to the left?

A decrease in consumer expectations Signup and view all the answers

The market supply curve is defined as:

The horizontal sum of individual supply curves of all producers Signup and view all the answers

Which factor is likely to lead to a rightward shift in the supply curve?

An increase in the number of producers Signup and view all the answers

What happens to the demand for a good when there is an increase in population?

Demand increases. Signup and view all the answers

How is market demand derived from individual demand?

By summing individual demands horizontally. Signup and view all the answers

What does a supply curve represent?

The quantity supplied at various prices. Signup and view all the answers

If the population decreases, what would most likely happen to the demand for a good?

Demand would decrease. Signup and view all the answers

Which statement accurately reflects the concept of individual demand and market demand?

Market demand is the sum of individual demands. Signup and view all the answers

What happens to the individual demand curve when a consumer's income increases?

It shifts to the right. Signup and view all the answers

Which of the following correctly illustrates the relationship between supply and demand?

Increased demand leads to higher prices. Signup and view all the answers

How does the market demand curve appear graphically?

As a downward-sloping line. Signup and view all the answers

What does a shift in the demand curve indicate?

A change in the quantity demanded at any given price Signup and view all the answers

Which scenario might result in an increase in demand for a product?

An increase in the population Signup and view all the answers

What is the effect of a decrease in price on the quantity demanded?

The quantity demanded increases Signup and view all the answers

When examining the demand schedules for coffee beans in 2002 and 2006, what is a likely implication of increased demand?

More coffee beans are produced overall Signup and view all the answers

How does a movement along the demand curve differ from a shift of the demand curve?

It indicates a change in quantity demanded due to a change in price Signup and view all the answers

Which statement is true regarding the demand curves for coffee beans in 2002 and 2006?

The demand in 2006 shows a rightward shift Signup and view all the answers

When the population increases, what generally happens to the demand for coffee beans?

Demand increases due to more potential consumers Signup and view all the answers

Which of the following is an example of an important demand shifter?

Prices of related goods Signup and view all the answers

In the context of demand, what does it mean for a product to have a rightward shift in its demand curve?

More quantity demanded at all prices Signup and view all the answers

Which factor would NOT lead to an increase in demand for a product?

A decrease in the price of substitute goods Signup and view all the answers

What effect does an increase in the number of producers have on the supply curve?

It shifts the supply curve right. Signup and view all the answers

How does an increase in the expected future price of a good influence current supply?

It decreases current supply. Signup and view all the answers

What defines the market supply curve in a competitive market?

The horizontal sum of all individual supply curves. Signup and view all the answers

What happens to the supply curve when technological advancements reduce production costs?

It shifts to the right. Signup and view all the answers

What is the equilibrium price in a competitive market?

The price where quantity supplied equals quantity demanded. Signup and view all the answers

If the supply curve shifts due to an increase in producer expectations about future prices, what would be an immediate effect?

Decrease in current supply. Signup and view all the answers

In terms of equilibrium, what occurs when the quantity demanded exceeds the quantity supplied?

An increase in equilibrium price. Signup and view all the answers

Which scenario would lead to a leftward shift of the supply curve?

An increase in input prices. Signup and view all the answers

What does a rightward shift of the supply curve indicate?

Increase in quantity supplied at higher prices Signup and view all the answers

What is the difference between a shift of the supply curve and a movement along the supply curve?

A shift indicates changes at every price level, while a movement indicates changes only due to price fluctuations. Signup and view all the answers

In the provided data, how many billions of pounds of coffee beans are supplied at the price of €1.50 before Vietnam's entry?

11.2 billion pounds Signup and view all the answers

After Vietnam's entry, what is the quantity supplied at a price of €2.00?

13.9 billion pounds Signup and view all the answers

What triggers a movement along the supply curve?

Changes in the price of the good Signup and view all the answers

If the entry of more coffee producers results in an increase in supply, what happens to the supply curve?

It shifts rightward Signup and view all the answers

Which of the following represents a quantity supplied change due to price?

Moving along the supply curve Signup and view all the answers

At a price of €0.75, how much was supplied after Vietnam’s entry?

10.9 billion pounds Signup and view all the answers

What is the quantity of coffee beans supplied at €1.00 after Vietnam's entry?

12.0 billion pounds Signup and view all the answers

If the coffee price decreases, what will generally happen to the quantity supplied?

It will decrease Signup and view all the answers

Study Notes

Supply and Demand Model

The supply and demand model illustrates how a competitive market operates
The demand schedule displays the quantity demanded at different prices. This information is visually represented by a downward-sloping demand curve.
Movements along the demand curve occur when price changes lead to changes in the quantity demanded.
Shifts of the demand curve represent changes in demand, which is the quantity demanded at any given price.
Five key factors influence the shifting of the demand curve:
- Changes in the prices of related goods or services
- Changes in income
- Changes in tastes
- Changes in consumer expectations
- Changes in the number of consumers
The market demand curve for a good or service is the sum of individual demand curves for all consumers in that market.
The supply schedule shows the quantity supplied at different prices. The supply curve is typically upward sloping, meaning higher prices lead to increased supply.
Movements along the supply curve occur when price changes result in changes in the quantity supplied.
Shifts of the supply curve demonstrate changes in supply, which is the quantity supplied at any given price.
Five main factors cause shifts in the supply curve:
- Changes in input prices
- Changes in the prices of related goods and services
- Changes in technology
- Changes in producer expectations
- Changes in the number of producers
The market supply curve for a good or service is the sum of individual supply curves for all producers in that market.

Finding Equilibrium

The intersection of the supply and demand curves indicates the market equilibrium point. This is where the quantity demanded equals the quantity supplied.
The corresponding price at the equilibrium point is called the equilibrium price (also known as the market-clearing price).
When the price is above the equilibrium price, there is a surplus, pushing the price downward.
When the price is below the equilibrium price, there is a shortage, pushing the price upward
An increase in demand leads to higher equilibrium prices and quantities, while a decrease in demand has the opposite effect.
Shifts in the supply curve are caused by changes in the quantity supplied at any given price.

Demand Shifts

An increase in population or other factors leading to increased demand for a good is represented by a shift to the right of the demand curve.
Market demand is the total demand of all individuals for a particular good or service.
The market demand curve is the horizontal sum of individual demand curves for all consumers.

Supply Shifts

An increase in supply due to factors such as new producers entering the market or advancements in technology is illustrated by a shift to the right of the supply curve.
A shift in the supply curve reflects changes in the quantity supplied at any given price.
Technological advancements have the potential to decrease production costs, leading to increased supply.
Expectations regarding future prices can influence current supply. For example, an anticipated rise in future prices may lead to decreased current supply.
The market supply curve is a horizontal summation of individual supply curves for all producers in the market.
Supply represents the behavior of those who sell goods or services.
The equilibrium point in a competitive market occurs when the quantity demanded equals the quantity supplied.

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Description

Test your understanding of the supply and demand model, a fundamental concept in economics. This quiz covers key aspects such as the demand schedule, movements along the demand curve, and factors influencing demand shifts. Dive in to assess your knowledge of how competitive markets operate!