CH2- Supply & Demand

Question 1

What is the quantity demanded (qd)?

Answer 1

The amount of the good that buyers are willing and able to purchase at a particular price

Question 2

What is demand (D)?

Answer 2

Relationship between a price and quantity demanded

Question 3

What is the law of demand?

Answer 3

The higher the price, the lower the demand

The lower the price, the higher the demand

Question 4

What can shift the demand?

Answer 4

Number of buyers
Consumer income
Consumer preferences
Consumer expectations
Prices of related goods

Question 5

What is the quantity supplied (qs)?

Answer 5

Amount of the good that sellers are willing and able to sell at a particular point

Question 6

What is supply (s)?

Answer 6

Relationship between a price and quantity supplied

Question 7

What is the law of supply?

Answer 7

The higher the price, the greater is the quantity supplied

The lower the price, the smaller is the quantity supplied

Question 8

What shift’s the supply?

Answer 8

Number of sellers
Change in technology
Sellers expectations
Prices for production Input
Prices for raw materials
Price for labor (wages)
Transportation

Question 9

What is the equilibrium price?

Answer 9

Unique point, at which the quantity demanded and the quantity supplied are equal
There are no surplus or shortage

Question 10

What is a surplus?

Answer 10

Sellers are eager to sell, while buyers aren’t eager to buy. A lot of product remain unsold

Question 11

What is a shortage?

Answer 11

Buyers are eager to buy and sellers aren’t eager to sell. potential buyers can’t find the product to buy

Question 12

What is a market price?

Answer 12

Market prices, set by supply and demand, allocate scarce resource in the economy

Question 13

What is a powerful incentive?

Answer 13

Price