Demand Basics
This term describes the total quantity all buyers are willing and able to purchase at various prices.
What is market demand?
This term describes how much producers are willing and able to sell at various prices.
What is market supply?
The price where quantity supplied equals quantity demanded.
What is the equilibrium price?
A price ceiling set below equilibrium causes this market problem.
What is a shortage?
Chicken and beef are substitutes. If chicken prices rise, what happens to beef demand?
Beef demand increases (shifts right).
A fall in the price of a good causes this kind of change on the demand curve.
What is a movement along the demand curve? OR What is change in quantity demanded?
When input costs rise, this happens to supply.
What is a leftward shift (decrease) in supply?
If the price is below equilibrium, there is a ________.
What is a shortage?
A price floor set above equilibrium creates this condition.
What is a surplus?
Gasoline and SUVs are complements. If gas prices rise, what happens to SUV demand?
SUV demand decreases (shifts left).
An increase in the number of consumers in a market will cause this change to the demand curve.
What is an increase OR a rightward shift in demand?
A new technology that speeds up production will cause this change to the supply curve.
What is a rightward shift (increase) in supply?
If the price is above equilibrium, there is a ________.
What is a surplus?
Give one real-world example of a price ceiling.
What is rent control (or gasoline price cap, etc.)?
A drought increases the price of hay. What happens to the milk market?
Milk supply decreases, causing price to rise and quantity to fall.
When income rises, the demand for steak increases. Steak is what type of good?
What is a normal good?
Name one shifter of supply.
What are input costs, technology, number of sellers, producer expectations, or government policy?
How does a shortage get resolved in a free market?
Buyers bid up prices, prompting producers to supply more until equilibrium is restored.
Give one real-world example of a price floor.
What is the minimum wage or agricultural price supports?
How might a subsidy for electric vehicles affect the gasoline market?
It could decrease gasoline demand as more people switch to EVs.
Name one non-price shifter of demand and explain how it could shift demand for streaming subscriptions.
What is tastes/preferences or income/expectations/number of buyers, which could shift demand right or left depending on the change?
Explain how an excise tax affects the supply curve and equilibrium.
The supply curve shifts left, raising price and lowering quantity as producers face higher costs.
How does a surplus get resolved in a free market?
Buyers buy less, prompting producers to supply less until equilibrium is restored.
Explain how a government subsidy to producers affects supply and equilibrium.
The supply curve shifts right, lowering price and increasing quantity as production costs decrease.
Describe one example of a government policy intervention (tax, subsidy, ceiling, or floor) that might create unintended consequences.
Examples include rent controls causing housing shortages, minimum wages causing fewer entry-level jobs, or farm subsidies leading to surplus production.