Law of Demand
Define Demand.
the amount of a good or service that consumers are able and willing to buy at certain prices.
Define Supply.
the amount of a good or service that producers are able and willing to sell at certain prices
Minimum wage is an example of a price _____.
floor
Define elasticity.
a responsiveness to price changes
Define Externality
a side effect of the production process- it can be positive or negative.
The price of hot dog buns increases. What happens to the demand of hot dogs?
It decreases.
A new tractor is built that can harvest 10x the amount of corn as previous tractors. Which way will the supply curve shift?
To the right.
A black market avoids government _______ and ________.
Price control, taxes
When price goes up just $1, the demand for a product that is _______ disappears.
Perfectly Elastic
Newspaper stands require one payment of $0.75 for access to the entire stack of papers. However, people only ever take one paper because they do not need need more than one. This is known as what?
Diminishing Marginal Utility
Prices of Substitute Product
A boat carrying rubber ducks crashes and spill across the ocean. What will happen to supply?
it will decrease.
A price ceiling is set _____ the equilibrium price.
Below
When the price of a product goes up and the demand does not change at all, that product is _______.
Perfectly Inelastic
If a pizza place adds a 6th worker, they will make an extra $500. However, if they add a 7th worker, they will lose money as there is not enough work for a 7th employee and they are wasting money on salary. This is known as what?
Law of Diminishing Marginal Returns.
Which determinant of demand only changes quantity demanded?
Price of the product
A new t-shirt machine can produce 3 more t-shirts per hour than before. What determinant of supply is this?
Technology and Productivity
A lemonade stand is an example of a ______.
Black Market
The introduction of Pepsi into a store that normally sells Coca-Cola sees a decrease in the sales of Coca-Cola. This is called the _______ effect.
Substitution
Positive, subsidy
Define Ceteris paribus.
all other things remaining unchanged or all things being equal.
Minimum wage increases to $20/hr. The supply of Big Mac's decreases. What determinant of supply is this?
Prices of Inputs Required to Make the Product
A shortage of a good could cause the government to institute a ______.
Price ceiling.
Due to an increase in teacher pay, the demand of teaching supplies has increased. This is due to the ______ effect.
Income.
Example: Pollution. A tax on a company for their toxic waste