1.4-1.6

Question 1

Competitive market

Answer 1

so many consumers and producers, no individual can influence price at which goods/services are sold

Question 2

Quantity demanded

Answer 2

amount of a good/service that consumers are willing and able to buy at a given price

Question 3

Law of demand

Answer 3

if prices are high, quantity demanded is low, and vice versa (inverse relationship)

Question 4

Supply/demand curve

Answer 4

graphical representation of supply and demand in a competitive market
Price on y, quantity on x

Question 5

Causes of shifts in demand

Answer 5

MERIT
Market size
Expectations
Related goods (substitute, complement)
Income
Taste

Question 6

Quantity supplied

Answer 6

Amount of a good or service producers are willing to sell at a specific price

Question 7

Law of supply

Answer 7

Price and quantity supplied of a good have a positive relationship
(Higher price, more will be supplied)

Question 8

Shifts in supply curve

Answer 8

TRICE
Technology
Related goods (complements/substitutes)
Input prices
Competition
Expectations

Question 9

Effects of a rightward demand shift

Answer 9

Higher price, higher quantity

Question 10

Effects of a leftward demand shift

Answer 10

Lower price, lower quantity

Question 11

Effects of a rightward supply shift

Answer 11

Higher quantity, lower price

Question 12

Effects of a leftward supply shift

Answer 12

Lower quantity, higher price

Question 13

Surplus

Answer 13

Price is above equilibrium point
Quantity supplied > quantity demanded
When government sets a price floor

Question 14

Shortage

Answer 14

Price is below equilibrium point
Quantity demanded > quantity supplied
Gov sets a price ceiling