Supply
The Law of Supply
What is when price goes up supply goes up (vice versa)
The Law of Demand
What is when price goes up demand goes down (vice versa)
Shoe manufacturer increases price on all shoes. What do we do to the supply curve?
(+50 for reasoning)
What is move up and along the curve
(increase in price alone / no supply shifter)
Quantity Demanded > Quantity Supplied
What is a Shortage
Quantity Supplied ≠ Quantity Demanded
What is disequilibrium
The difference between supply and quantity supplied
What is supply is the total amount of a good or service available and quantity supplied is the amount a producer is willing to sell
The two requirements for a person to demand something
What is the desire AND ability to own it
Mr. Doyle's income went up this month. What would happen to his demand for ramen noodles? (inferior good)
(+50 for reasoning)
What is demand would go down
(Mr. Doyle can afford something more luxurious than ramen)
Price Ceiling AND one example
(Definition = 50)
(Definition + ex. = 100)
What is the maximum legal price a supplier can charge for a good or service (rent control)
Quantity Supplied > Quantity Demanded
What is a Surplus
A depiction of the relationship between price and quantity supplied represented in a table
What is a supply schedule?
A consumer reacts to a rise in the price of one good by consuming less of that good and more of a similar one.
What is the substitution effect
Consumers expect gas prices to go up in the near future. What effect does this have on the demand for gas?
(+50 for reasoning)
What is the demand would go up (shift to the right)
(Prices expected to go up = demand goes up)
Quantity Supplied = Quantity Demanded
What is Market Equilibrium
Price Floor AND one example
(Definition = 50)
(Definition + ex. = 100)
What is the legal minimum price for a good or service (minimum wage)
The difference between a subsidy and an excise tax
What is a subsidy is a govt payment that supports companies and an excise tax is a tax on the production/sale of a good
A table that lists the quantity of a good all consumers in a market will buy at every different price.
What is a demand schedule?
Brazil is the main supplier of coffee beans for America. If Brazil faces a supply shock of coffee beans, what will happen to the supply curve for coffees sold in America?
(+50 for reasoning)
What is the supply curve will decrease (shift to the left)
(If the global supply of a good decreases, so will our local supply)
The difference between fixed and variable costs
What is fixed costs do not change but variable costs change based on the amount produced/used
Supply Shock
What is a sudden shortage of supply
The 6 Supply Shifters
(4 for 500)
(6 for 1000)
What is changes in input costs, technology, subsidies/excise tax, govt regulations, global supply, and expectations
The 6 Demand Shifters
(500 for 4)
(1000 for all 6)
What is changes in income, consumer expectations, population size, consumer demographics, tastes and advertising, and prices of related goods.
There is a drought that negatively impacts the production of avocados. At the same time, a new diet based on eating a lot of avocados becomes popular with health influencers. What happens to the graph (market) of avocados?
(+1000 for a correctly drawn supply and demand graph w/ changed prices and quantities)
What is the supply for avocados shifts to the left (goes down) and the demand for avocados shifts to the right (goes up).
(Supply shock = decrease supply / Trending = increase demand)
Increasing and Decreasing Marginal Returns
(500 for one)
(1000 for both)
What is Increasing Marginal Returns is when an additional worker adds more output than the first worker
What is Decreasing Marginal Returns is when an additional worker decreases the output compared to the first worker
The additional cost of producing one more unit (good/service)
The additional income of selling one more unit (good/service)
(500 for one)
(1000 for both)
What is Marginal Cost and Marginal Revenue