Q3- Supply and demand

Question 1

Define demand

Answer 1

quantities that consumers are willing and able to buy per period of time at various prices

Question 2

What are the determinants of demand?

Answer 2

• price of product in question(affects quantity demanded
• income available to household
• household’s amount of accumulated wealth
• the prices of related products available to household
• household’s tastes and preferences
• household’s expectations about future income, wealth, and prices

Question 3

What causes a shift in Demand?

Answer 3

• price of related/substitute products
• time of year
• trends
• weather
• NOT INCREASE OR DECREASE IN PRICE OF PRODUCT

Question 4

what causes a shift in Quantity demanded?

Answer 4

price

Question 5

What does the law of demand state?

Answer 5

States that there is a negative, or inverse, relationship between quantity demanded and price

Question 6

Demand curve slopes ________

Answer 6

downward

Question 7

________ is the sum of all household wages, salaries, profits, interest payments, rents, and other forms of earnings in a given period of time

Answer 7

income

Question 8

Income is a ______ measure

Answer 8

flow

Question 9

_________ is income measured in terms of the amount of goods and services that it will buy.

Answer 9

Real income

Question 10

Real income will _______ if either actual income increases or prices fall

Answer 10

increase

Question 11

________ is the effect that a price change has on real income and therefore on the quatntiy demanded of a product

Answer 11

income effect

Question 12

______ or ______ is the total value of what a household owns minus what it owes

Answer 12

Wealth/net worth

Question 13

Wealth is a ______ measure

Answer 13

stock

Question 14

def. goods for which demand goes up when income is higher and for which goes down when income is lower

Answer 14

normal goods

Question 15

def. goods for which demand falls when income rises

Answer 15

inferior goods

Question 16

def. goods that can serve as replacements for one another; when the price of one increases, demand for the other goes up

Answer 16

substitutes

Question 17

def. goods that “go together” a decrease in price for one results in an increase in demand for the other, and vice versa

Answer 17

complements

Question 18

Define supply

Answer 18

the quantities that producers are willing and able to sell per period of time at various prices

Question 19

What is the goal of producers?

Answer 19

Maximise profits

Question 20

A table showing how much of a product firms will supply at different prices is called a _______

Answer 20

supply schedule

Question 21

quantity supplied represents ________

Answer 21

the number of untis a product that a firm would be willing and able to offer for sale at a particular price during a given period of time

Question 22

What does the law of supply state?

Answer 22

states there is a positive relationship between price and quantity of a good supplied

Question 23

What are some determinants of supply?

Answer 23

• Product cost:
  
  • price of required inputs (labour, land, capital)
  • business taxes levied
  • technologies that can be used to produce the product ]
    - availability of resources
• Price of related products

Question 24

def. sum of all the quantities of a good or service supplied per period by all the firms selling in the market for that good or service; addition of individual firm’s supply curves (add quantities)

Answer 24

market supply