2 - Supply and Demand

Question 1

What are Limiting Factors of Supply?

1.
2.
3.
4.
5.

Answer 1

• wages, salaries
• interest rates, asset returns
• prices of raw materials and intermediate goods
• production technology
• working hours / day or year

Question 2

What are Limiting Factors of Demand?

1.
2.
3.
4.

Answer 2

• income and division of income (savings and consumption)
• prices of substitute goods
• prices of complimentary goods
• preferences, depending on age, health, gender, …

Question 3

What is a Equilibirum Price?

1.
2.

Answer 3

• the price where supply and demand are equal
• -> market clearing; prices adjust until markets clear