modul 4 Flashcards
How does a change in technology impact supply?
A change in technology decreases the cost of production, leading to an increase in supply.
How does income affect the demand for goods?
For normal goods, an increase in income leads to an increase in demand, while for inferior goods, an increase in income leads to a decrease in demand.
What factor can cause a change in supply?
Technology
What is the equilibrium price?
The price at which quantity demanded equals quantity supplied
What causes a shortage in the market?
The quantity demanded exceeds the quantity supplied at the current price
What happens to equilibrium price if the demand curve shifts farther to the left than the supply curve?
The equilibrium price will be lower than it was before.
What is the main reason for the rapid increase in equilibrium quantity and decrease in equilibrium price of personal computers?
Technological change
How can the model of demand and supply be used to explain equilibrium prices and quantities in different markets?
By analyzing the interaction between demand and supply curves to determine the point of equilibrium where price and quantity are balanced.
How did higher gasoline prices impact the production of goods and services?
Higher gasoline prices increased the cost of producing virtually every good and service, leading to a leftward shift in supply curves, pushing prices up and output down.
How does the law of demand relate to the relationship between price and quantity demanded?
The law of demand states that, all other things unchanged, a higher price leads to a reduction in quantity demanded and a lower price leads to an increase in quantity demanded.
