Supply and Demand

Question 1

What are simplified versions of reality?

Answer 1

Economic Model

Question 2

What is an example of a positive economic statement?

Answer 2

If the price of gas rises, a smaller quantity will be bought.

Question 3

______ exists because unlimited wants exceed the limited resources available to fulfill those wants.

Answer 3

Scarcity

Question 4

An example of a Trade-Off

Answer 4

To compete in the automobile market, Tesla must make many strategic decisions as whether to introduce a new car model, how to sell and service its cars, and where to advertise. At Tesla’s Fremont, California plant, managers must decide on the monthly production quantities of their S and X models.

Question 5

Trade-Off

Answer 5

A situational decision that involves diminishing or losing one quality, quantity, or property of a set or design in return for gains in other aspects. In simple terms, a tradeoff is where one thing increases, and another must decrease

Question 6

What does not shift the demand curve?

Answer 6

an increase in the price of the good.

Question 7

A curve shift vs. movement along the curve.

Answer 7

A curve will shift if the quantity of supply or quantity of demand changes or other outside factors change. There will be movement if the price changes.

Question 8

If you are considering buying either an Apple Watch or a Samsung Smart Watch, and you choose the Samsung only because the price is lower, than you consider

Answer 8

The Apple Watch and the Samsung Smart Watch to be Substitutes.

Question 9

Complementary Goods

Answer 9

A complementary good is a product or service that provides value to another product or service. In other words, they are two things that the customer utilizes in conjunction with one another. Cereal and milk, for example, or a DVD and a DVD player

Question 10

Substitute Good

Answer 10

Similar products that a customer may use for the same purpose. Your customers may choose the product they prefer if it’s available and consider substitutes if the price, availability or quality of their preferred product changes.

Question 11

Normal Good

Answer 11

A good that experiences an increase in its demand due to a rise in consumers’ income.

Question 12

If a decrease in income leads to a decrease in the demand for brownie mix.

Answer 12

Than brownie mix is a normal good.

Question 13

Inferior Good

Answer 13

A good that experiences an increase in demand due to a fall in consumer income.

Question 14

If a decrease in income leads to an increase in the demand for Ramen Noodles, then the Ramen Noodles are

Answer 14

An Inferior Good

Question 15

Demand

Answer 15

The quantity of a good or service that consumers are willing and able to buy.

Question 16

Price

Answer 16

The amount of money exchanged for a good or service.

Question 17

Supply

Answer 17

The amount of goods available.

Question 18

If there is a decrease in supply would cause the supply curve to shift

Answer 18

Left

Question 19

An increase in demand would cause the demand curve to shift

Answer 19

Right

Question 20

A decrease in the quantity supplied would cause there to be

Answer 20

Movement down the curve.

Question 21

An increase in the quantity demanded would cause there to be

Answer 21

Movement up the curve.

Question 22

If the price of a good increase then there is

Answer 22

Movement down the curve.

Question 23

Demand and Price relationship

Answer 23

If the price goes up, the quantity demanded goes down (but demand itself stays the same). If the price decreases, quantity demanded increases. This is the Law of Demand. On a graph, an inverse relationship is represented by a downward sloping line from left to right.