The inverse relationship between price and Quantity demanded, ceteris paribus.
question
What are the non price determinants of demand
answer
Consumer's tastes and preferences
Consumer's information
Consumer's income
Normal goods
Inferior goods
Number of consumers in the market
Consumer's expectations of future prices
Prices of related goods
Substitute goods
Complimentary goods
question
Movement along vs shift in demand
answer
A movement along the demand curve is caused by a change in PRICE of the good or service.
A shift in the demand curve is caused by a change in any non-price determinant of demand. The curve can shift to the right or left.
question
The law of supply
answer
the tendency for the quantity supplied of a good in a market to increase as its price rises.
question
What are the non price determinants of supply
answer
Technology
Weather conditions
The price of inputs used in production
The number of sellers in the market
Expectations of future prices
Government taxes, subsidies, regulations
question
Movement along vs shift in supply
answer
Movement along the supply curve: occurs when a change in the quantity supplied of a good is brought along by a change in its price.
A shift in the supply curve: occurs when a change is brought along by any source other than the price.
question
Equilibrium price
answer
the price at which the quantity that sellers are willing to sell equals the quantity that consumers are willing to purchase.
question
Effects of a change in demand
answer
An increase in demand will shift the demand curve to the right, resulting in a higher equilibrium price and quantity.
A decrease in demand will shift the demand curve to the left, resulting in a lower equilibrium price and quantity.
question
Effects of a change in supply
answer
An increase in supply will shift the supply curve to the right, resulting in a lower equilibrium price and a higher equilibrium quantity.
A decrease in supply will shift the supply curve to the left, resulting in a higher equilibrium price and a lower equilibrium quantity.
question
Shortage (excess demand)
answer
a situation in which the quantity demanded is greater than the quantity supplied. This occurs when the price in the market is below the equilibrium price.
question
Surplus (excess suply)
answer
a situation in which the quantity supplied is greater than the quantity demanded. This occurs when the current price in the market is above the equilibrium price.
question
Equilibrium quantity
answer
the quantity traded at the equilibrium price.
Haven't found what you need?
Search for quizzes and test answers now
Quizzes.studymoose.com uses cookies. By continuing you agree to our cookie policy