Equilibrium
What happens when demand decreases
the curve shifts to the left, price decreases, quantity decreases.
How does an increase in the cost of labor affect the equilibrium quantity of a firm's product?
Increase in costs/factors of production - leads to supply curve shift to the left
Increase in price, decrease in quantity
The population is growing, from currently 8 billion to 9 billion in the next 10 years. How does this affect the price equilibrium of a firm's product overtime?
Increase in number of consumers - As pop. ages there will be more demand as there will be more people of working age, thus potential consumers.
Demand curve shift to the right
increase in both price and quantity
What is consumer Surplus
the monetary difference between what consumers are willing to pay and the price they actually pay for the quantity of a good purchased
tungtungtung____
sahur
What is the market equilibrium?
When demand meets supply,
The condition where the price of the quantity demanded for a product is equal to the quantity supplied
How does an increase in the price of energy affect the equilibrium price of goods produced using that energy?
leads to a leftward shift in the supply curve for the goods. Leads to higher prices and quantity decrease.
Newer generations are starting to not prefer bitter tastes in their meals & cuisines, how does this affect the price equilibrium of pare (bitter melons)?
Changes in taste and preferences - Demand curve shifts to the left
Decrease in price and quantity
Producer surplus is?
The extra amount a seller earns above their minimum acceptable price
Most hated country currently?
India
What are the functions/roles of market equilibrium?
Signalling - informing market participants of changes in price.
Incentive - Motivates producers when prices are high and consumers when it is low
Rationing - Higher prices leads to less demand, in a finite resource world only few people who are willing and able end up with the good
How does an increase in the availability of pepsi and big cola affect the equilibrium price and quantity of cocacola?
Increased substitute - cocacola competes with pepsi and big cola more
leads to shift in supply curve to the right
leads to lower prices and higher quantity
It is anticipated that EVs will be the new norm in transportation. How does this information affect the equilibrium price?
Future price expectations - consumers purchase a product knowing that the price in the future will increase
Demand curve shifts to the right
increase in both price and quantity
What is producers may gain short-term surplus, consumers lose surplus due to higher prices, and overall efficiency falls due to deadweight loss?
A government introduces a price floor above equilibrium. Surplus changes, explain who gains, who loses, and whether efficiency is affected.
Who dips their face with Saratoga?
Ashton Hall
What is allocative efficiency?
When resources are distributed in a way that consumers and producers get the most benefit
An optimal resource allocation from society's point of view, typically drawn by market forces.
How does the decrease in the quantity supplied in chicken affect the equilibrium price of eggs?
Joint supply - a decrease in chicken output may lead to a decrease in egg output.
Thus, supply curve shifts to the left and thus reducing quantity and increasing price.
How does a pay rise affect the equilibrium price of indomie?
Increase in income - indomie is considered as inferior good, hence as income increases quantity demanded decreases as more people prefer eating handmade noodles
Demand curve shift to the left
decrease in both price and quantity
Producer surplus may increase if quantity sold does not fall significantly, but if demand is highly elastic, total revenue and surplus could decrease?
Producer surplus doesn’t always increase when market price rises. If demand is elastic, the drop in quantity sold might offset the price gain, reducing or limiting the surplis
What does the tiktok food contain?
Steak, eggs, and avocados
Examine the view that the best allocation of resources, from society’s point of view, occurs where the marginal private benefit equals the marginal private cost.
It is known that producing more cars have greater profit margins than motorbikes. So firms produce more of cars.
How does it affect the equilibrium price of motorbikes?
Competitive supply - supply curve shifts to the left, as firms choose to produce more cars than motors.
Increase in price, reduction in quantity
The shoe industry is booming, as consumers grow a keen taste in shoe collection. How does this affect the price equilibrium of socks?
related (complementary goods) - people often wear shoes with socks
Demand curve shift to the right
increase in both price and quantity
Producer slurp (dont choose this one)
slurp slurp slurp slurp slurp producer
Chicken
Jockey