B5-M2 Market Influence on Business 1

Question 1

what does a shift left in any demand curve represent?

Answer 1

A shift LEFT represents a DECREASE in demand (at all price levels)

Note:
- a change in supply curve will not cause a shift in the demand curve
- price changes cause movements along the supply curve, not shifts in the supple curve. Same for demand

Question 2

what is elasticity of demand vs. inelasticity of demand?

Answer 2

• Elasticity of demand: change in price or income, affect demand substantially. ex: if an item has many similar substitutes, its price elasticity of demand will be high as consumers can always switch to a substitute
• Inelasticity (curve is vertical) of demand: change in price or income, affect demand relatively low. ex: if an item is high end or necessity, price elasticity of demand will be low or inelastic.

Question 3

what would affect the QUANTITY demand of a product?

Answer 3

price of that product. price of complementary product would affect the demand CURVE

Question 4

what is a demand curve?

Answer 4

the maximum quantity of a specific good that consumers are willing and able to purchase at each and every price

Question 5

what is a supply curve?

Answer 5

the maximum quantity of a specific good that sellers are willing and able to produce at each and every price

Question 6

what is governmeent price support program?

Answer 6

act a subsidy (grant money) that will encourage suppliers to increase supply beyond an equilibrium, which leads to surplus

Question 7

what is the relationship between price of the product and the quantity demanded?

Answer 7

inverse