| Terms | Graphs | Scenarios |
|---|---|---|
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The amount that firms will produce and offer for sale under certain conditions during
a specified time period
Supply
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If someone's income increases, what would be the impact on the demand for an inferior good?
shifts to left
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When the price of a good goes up, people buy less of it, other things being equal.
When the price of a good goes down, people buy more of it, other things being equal. (3 words)
Law of Demand
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Assuming pencils and pens are substitutes. What would happen to the demand for pencils if the price of pens increases?
the demand for pens shifts right
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Goods for which the demand rises when consumer income rises are called:
Normal Goods
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Is there a surplus or a shortage at $20? How large is it?
shortage of 2000
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Assuming lettuce and tomatoes are complements of one another, how and why would a decrease in the price of lettuce impact the demand curve of tomatoes?
- Demand curve would shift to the right
- Because these two goods are consumed together, the decrease in the price of one will lead to increased demand for the other |
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Money granted by the government to assist an industry so that the price of a commodity may remain low.
Subsidy
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What causes demand to move from d1 to d2?
- income
- tastes and preferences - prices of related goods: complements/substitutes - Expectations - Market size |
What impact would an increase of the price of tomatoes have on a supply graph?
Increase Quantity Supplied
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Name a determinant of demand
- income
- tastes and preferences - prices of related goods: complements/substitutes - Expectations - Market size |
What event(s) would cause this shift in demand and supply?
ex. # of suppliers increases; demand increases because incomes increased. The effect of the increased incomes affected the market more than the new suppliers.
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What would be the impact of a per unit subsidy be on both the supply and demand graph?
can create a shortage
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