Week 2 - Supply, Demand, and Equilibrium

Question 1

6 factors that shift demand curves

Answer 1

P — preferences
E — expectations
P — price of related goods
T — type and number of buyers
I — income
C — congestion and network effects

Question 2

2 factors of perfect competition

Answer 2

1. All firms in an industry sell an identical good
2. Many buyers and sellers, all of whom are small relative to size of the market

Question 3

Variable costs vs Fixed costs

Answer 3

Variable costs — costs that vary w quantity of output you produce
Fixed costs —costs that don’t vary w quantity of output you produce

Question 4

5 factors that shift supply curve

Answer 4

I — input prices
P — productivity and technology
O — other opportunities/price of related outputs
E — expectations
T — type and number of sellers

Question 5

Planned economies vs Market economies

Answer 5

Planned economies — centralized decisions are made ab what and how goods and services and produced and allocated
Market economies — each individual makes their own production and consumption decisions, buying and selling in markets

Question 6

3 symptoms of market in disequilibrium

Answer 6

1. Queuing — waiting in line means there’s not enough because it costs you time and money to get something
2. Bundling of extras — pay for something else just to get what you wanted to begin with
3. Secondary market — finding another option