Module 6-7 (supply and equilibrium)

Question 1

What is the difference between movements along the supply curve and changes in supply

Answer 1

the shift in the supply curve are by the determinants of supply and the movement along the supply curve is the change of P of the same good.

Question 2

Quantity supply

Answer 2

the amount of goods or services a producer is willing to sell at some specific price

Question 3

Supply schedule

Answer 3

how much good or service producers will supply at different prices

Question 4

Supply Curve

Answer 4

shows the relationship b/w Qs and P, basically graphs the supply schedule

Question 5

Law of Supply

Answer 5

the direct relationship between Price and Quantity supply

Question 6

change in supply and what are the factors that cause the shift

Answer 6

is a shift of the S curve in which the quantity supplied changes

△ technology
△ expectation of sellers
△ # of suppliers (producers)
△ P of related goods or services
△ in input prices (resource prices)

Taxes and government subsidies

Question 7

Movement along the supply curve

Answer 7

A change in Qs on the curve of a good because a change of the SAME good’s price

Question 8

Input

Answer 8

Anything that is used to produce a good or service

Question 9

Individual supply curve

Answer 9

the relationships between Qs and P for an individual producer

Question 10

Equilibrium

Answer 10

an economic situation in which no individual would be better off doing something different

Question 11

equilibrium price

Answer 11

When Qs = Qd also known as the market clearing price

Question 12

equilibrium quantity

Answer 12

the quantity of the good bought and sold at the equilibrium price is called the equilibrium quantity

Question 13

Why does the market price fall if it is above the equilibrium price

Answer 13

Because there is a surplus there for Qs > Qd and bring the prices back down will make buyers buy the supply again because it will being towards back to equilibrium

Question 14

Price about its equilibrium creates a ______

Answer 14

surplus

Question 15

Surplus

Answer 15

of a good is when Qs > Qd because P is above the Equilibrium point

Question 16

Shortage

Answer 16

when Qd > Qs because P is below the equilibrium point

Question 17

Why does the market price rise if it is below the Equilibrium price

Answer 17

Because there is high demand so sellers can jack their price back up and it will bleed off the shortage and go back to equilibrium

Question 18

Price below its Equilibrium level creates a ______

Answer 18

shortage

Question 19

How equilibrium price and quantity are affected when there is a simultaneous change in both supply and demand

Answer 19

depends on graph

Question 20

What happens when a demand curve shifts [7]

Answer 20

When the demand curve shifts to the right, meaning increase in demand, that means the prices go up and Qs goes up as well.

When the demand curve shifts to the left, meaning D goes down, that means the Price goes down and the Qs goes down as well.

Question 21

What happens when the supply curve shifts [7]

Answer 21

If the supply curve shifts to the left meaning Supply has gone down due to the determinants of supply, that means the Qs goes down, however P depends on how dramatically the supply goes down.

Now if the supply shifts to the right meaning supply goes up, then P goes down (usually) and Qs goes up

Question 22

Simultaneous shifts of Supply and Demand Curves

Answer 22

check the graph

Question 23

Factors that shift supply

Change in Input prices

Answer 23

If an input used to produce A rise, supply of A decreases to the left

If P of input used to produce A falls then supply of A increases (shifts right)

Question 24

Change in P of related goods or services

If A and B are substitutes in production

Answer 24

if price of B rises then supply of A decreases

if price of B falls then supply of A increases

Question 25

Change of P of related goods or services

If A and B are complements in production

Answer 25

If price of B rises then supply of A increases

If price of B falls then supply of A decreses

Question 26

Changes in Technology

Answer 26

If technology used to produce A improves then supply of A increases

Question 27

Changes in expectations

Answer 27

If price of A is expected to rise in the futures than supply of A decreases

If price of A is expected to fall in the future than supply of A increases

Question 28

Change in number of producers

Answer 28

If number of producers for A rises then supply of A increases

If number of producers falls for A then supply for A decreases