Supply And Demand

Question 0

What is the income effect

Answer 0

If real incomes increase, typically so does demand

Question 1

What are the determinants of demand

Answer 1

Tastes
Pop : more buyers = more demand
Advertising
Expectations of consumers

Question 2

What is the substitution effect

Answer 2

If good A and B are substitutes
And good A’s price falls
Demand for B will fall and for A will rise

Question 3

Finding P and Q using algebra

Answer 3

Qd= 1700 -3p in form y=a +bx linear eq.

Question 4

What affects a shift in the supply curve

Answer 4

Price
Probability of other goods in production and prices of goods in joint supply
Natural shocks/social factors
Costs of production
Expectations of producers
Number of sellers

Question 5

Finding market equilibrium using algebra

Answer 5

Substitution; 
Qd=32-3p        Qs=20+4p
Qd=Qs ...
Elimination;
Qd=20-2p        Qs=2+2p
Qd+Qs ...