chapter 3: demand + supply

Question 1

law of demand:
inverse relationship between the price of a good + the amount of it buyers are willing to purchase

Answer 1

if the price (p) of a good increases, the quantity demanded (QD) decreases

Question 1

law of demand graph

Answer 1

there is always going to be a negative slope if the price increases, because the quantity demanded goes down!
- change in demand changes the curve
- change of demand changes shift along the curve

Question 2

law of supply
there’s a direct relationship between the price of a good + the amount of it that will be offered for sale

Answer 2

as price goes up, quantity supplied increases
- always going to assume the slope is positive + linear

Question 3

change in quantity supplied (Qs)

Answer 3

a movement in the supply curve is a result of price change alone

Question 4

(S1–> S2) change in supply

Answer 4

a shift in the entire curve. this occurs when something other than price/ quantity supplied changes

Question 5

the supply curve shifts whenever ceteris paribus is violated

Answer 5

ex: input costs, changes in technology, taxes/ subsidies, expectations

Question 6

if the price of sprinkles goes up, then the demand (curve) per ice cream:

Answer 6

shifts in

Question 7

if the price of whipped cream rises, then the demand for whipped cream:

Answer 7

stays the same (because the actual demand stays the same

Question 8

if the price of ice cream used in making a shake goes up, the supply curve for shakes:

Answer 8

shifts in because it’s not going to be harder to make shakes