the quantity of a good or service that buyers are willing and able to buy at all possible prices during a certain time period
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price
answer
the amount of money that buyers pay when they buy a good or service; the amount of money sellers receive when they sell a good or service
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quantity demanded
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a graphic representation of the law of demand
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what happens to price and quantity demanded when there is downward movement along the demand curve?
answer
price decreases and quantity demanded increases
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what happens to price and quantity demanded when there is upward movement along the demand curve?
answer
price increases and quantity demanded decreases
question
when you shift the demand curve to the right, what happens to the quantity demanded at any given price?
answer
quantity demanded increases
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supply
answer
the quantity of a good or service that producers are willing and able to offer for sale at each possible price during a given time period
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supply curve
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when price increases, the quantity supplied increases, and when price decreases, the quantity supplied decreases
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market equilibrium
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when price increases, the quantity supplied increases, and when price decreases, the quantity supplied decreases
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equilibrium price
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the price at which quantity supplied and quantity demanded are equal. The point at which the supply and demand curves intersect
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price controls
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a barrier that prevents a market from reaching equilibrium
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price floors
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a legal barrier that holds a price above the equilibrium price such as a minimum wage
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price ceilings
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a legal barrier that holds a price below the equilibrium price such as rent control
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law of supply
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as the price of a good or service rises, the quantity supplied of that good or service rises. Likewise, as the price of a good or service falls, the quantity supplied of that good or service falls
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changes in demand
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taste/preferences, income, population, prices of substitutes, consumer expectation
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income
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income increase = demand of normal goods increases
income decrease = demand of inferior goods decreases
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change in quantity demanded
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on the curve
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change in demand
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shift
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change in quantity supplied
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on or along the curve
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change in supply
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shift
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equilibrium
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quantity supplied = quantity demanded
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If a good is considered "normal" by economists, an increase in consumers' incomes will result in a decrease in the demand for the good.
answer
false
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If the price of peanut butter were to increase, what would likely happen to the demand for jelly?
answer
The demand for jelly would decrease—the demand curve would shift left
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A decrease in the price of a good would be illustrated on a supply graph as a:
answer
Movement along the supply curve downward.
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If the number of consumers in the market for good A increases, what will happen to the equilibrium price and quantity of good A?
answer
Equilibrium price and quantity will both increase
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According to the law of supply, if the price of a good or service increases:
answer
Quantity supplied will increase.
question
If two goods are complements, an increase in the price of one good will cause a decrease in the demand for the other.
answer
True
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If producers expect the price of a good to rise, what will happen to the good's equilibrium price and quantity?
answer
Equilibrium price will increase and equilibrium quantity will decrease
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If the price of one of the resources used to produce a good decreases:
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The supply curve for that good would shift right.
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If consumers expect higher coffee prices in the future:
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The demand for coffee will increase now.
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An improvement in technology used by producers of a certain good will result in:
answer
An increase in the supply of the good.
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If the government decides to subsidize the production of a good, the result would be a decrease in the equilibrium price and a decrease in the equilibrium quantity.
answer
b. False
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An increase in the price of a good would be illustrated on a demand graph as a:
answer
Movement along the demand curve upward.
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An increase in the average incomes of consumers will result in:
answer
An increase in the demand for goods and services.
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When the price of good A rises, people start to drink good B. In this case:
answer
Good B is a substitute good.
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A government-imposed price floor, above the equilibrium price, in the market for a good will result in:
answer
A surplus of the good or service.
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If the government imposes a tax on the production of a good or service, what will happen to the equilibrium price and quantity of the good?
answer
Equilibrium price will increase and equilibrium quantity will decrease
question
According to the law of demand, as the price of a good or service increases, the:
answer
Quantity demanded of the good or service will decrease.
question
If good A is considered to be an inferior good, when incomes rise:
answer
The demand for good A will decrease and the demand curve will shift to the left.
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