Supply
"If the price of a product increases, the quantity supplied also increases." What is the name for this concept?
The LAW of SUPPLY
What term is defined as "all the quantities of goods that buyers are willing to buy at all possible prices"?
Demand
Assume that people will drink either Coke or Pepsi. They don't care; they just like cola. What is the term for these types of goods?
Substitute goods
What is the definition of the equilibrium point?
The price where quantity supplied = quantity demanded (QS=QD).
If the demand for chocolate bars increases, what will happen to the equilibrium price and quantity of chocolate bars?
Both price & quantity will INCREASE.
What term is defined as "all of the quantities of goods that sellers are willing to produce & sell at all possible prices"?
supply
"If the price of a product increases, the quantity demanded decreases." What is the name of this principle?
the LAW of DEMAND
If people stop drinking soda because studies show that it is not good for the body, which determinant explains why people stopped buying soda?
change in TASTES
If a good is priced above the equilibrium, what will be the negative result.
It will lead to a SURPLUS.
Assume that hamburgers and hamburger buns are complements. If the price of beef decreases, what will happen to the equilibrium price of hamburger BUNS?
Less expensive beef will cause more people to buy beef to make hamburgers. This will increase the demand for hamburger buns. If the demand for hamburger buns increases, the equilibrium price and quantity will also increase.
What is the general term for the things that shift the supply curve to the right or to the left?
Determinants
Which of the determinants of demand deals with a change in the popularity of a product?
change in TASTES
What is the name of the type of good that people are more likely to buy when they do not have much money?
Inferior good
The QD=5. The QS=9.
Is there a surplus or shortage? Calculate the amount of the surplus/shortage.
There is a surplus of 4.
(QS > QD) 9-5=4
Assume that hamburgers are made of beef. If the price of beef rises, how will this affect the equilibrium price and quantity of hamburgers?
This is an increase in the cost of resources, which causes supply to decrease. As a result, the PRICE INCREASES and the quantity DECREASES.
Which determinant of supply is related to new machines, computers, and new electronic devices?
change in Technology
If people's income rises and they buy more new cars, then new cars are examples of what types of goods?
NORMAL goods
If a restaurant produces hamburgers because the price of beef increases, which determinant explains this change?
change in the COST of RESOURCES
The equilibrium price is $100. The government sets the price at $125. What is the name of this type of price control?
It's a price FLOOR (because it's above the equilibrium price).
Assume that people will eat either hamburgers or hot dogs. If the price of hot dogs decreases, how will this affect the equilibrium QUANTITY of hamburgers?
If hot dogs are cheaper, people will buy hot dogs. Demand for hamburgers DECREASES. This will cause a decrease in the equilibrium quantity.
Which two determinants of supply are related to the items that are used to produce goods and services?
Availability of resources and cost of resources
Which demand determinant is related to the population of an area?
change in the NUMBER OF CONSUMERS
If milk and cereal are complementary goods, what will happen to the demand for cereal if the price of milk increases?
Which term is defined as "the maximum price--set by the government--that a seller can charge for a good"?
price CEILING
Assume that a company has new technology. How will this affect the equilibrium price and quantity of their products?
PRice will decrease; quantity will increase (because of the increase in supply)