Demand and Supply Part 1

Question 1

relation showing the quantities of a good that consumers are willing and able to buy per period at various prices

Answer 1

Demand

Question 2

demand of an individual consumer

Answer 2

Individual demand

Question 3

sum of the individual demands of all consumers in the market.

Answer 3

market demand

Question 4

the relationship between prices and the specific quantities demanded at each

Answer 4

demand schedule

Question 5

curve or line showing the quantities of a particular good demanded at various prices during a given period, other things constant

Answer 5

demand curve

Question 6

sum of the individual demand curves for all consumers in the market

Answer 6

market demand curve

Question 7

amount demanded at a particular price

Answer 7

quantity demanded

Question 8

the quantity of demanded products per period relates inversely to their price, other things constant

Answer 8

Law of Demand

Question 9

product’s price changes demand due to people buying and consuming other substitute goods

Answer 9

substitution effect

Question 10

product’s price changes a consumer’s real income or purchasing power (the capacity to buy within a given income).

Answer 10

income effect

Question 11

change in total economic utility (or simply utility) resulting from a one-unit change (meaning buying more than one) when you consume a product or service

Answer 11

Marginal utility

Question 12

amount of satisfaction a consumer receives from the consumption of a product or service.

Answer 12

Economic utility

Question 13

the more of the product or service an individual consumes per period, other things constant (ceteris paribus), the smaller the marginal utility of each additional unit consumed.

Answer 13

Law of Diminishing Marginal Utility

Question 14

2 examples of applications of Diminishing Marginal Utility:

Answer 14

1. Restaurants that have all-you-can-eat specials
2. Having a second copy of today’s newspaper

Question 15

the relationship between the demand for a commodity and the factors (product’s price, prices of related products, level of income, taste, preferences, etc.) that determine or influence this demand

Answer 15

demand function

Question 16

formula for finding the demand function

Answer 16

QD = a – bP

Question 17

If there is a movement from one point to another (or from one price-quantity combination to another) along the same demand curve, there is a _________

Answer 17

change in quantity demanded (∆QD)

Question 18

When an entire demand curve shifts leftward or rightward, there is a ________

Answer 18

change in demand

Question 19

What are the 6 factors/forces that cause changes to the demand curves?

Answer 19

1.Taste or Preference
2.Changing Incomes
3.Population Change
4.Occasional or Seasonal Products
5.Substitute and Complementary Goods
6.Expectations of Future Prices

Question 20

consumers’ personal likes or dislikes for certain goods and services.

Answer 20

Taste or Preference

Question 21

An increase in one’s income increases an individual’s capacity or power to demand products or services that they cannot buy due to having a lower income.

Answer 21

Changing Incomes

Question 22

What are the 2 broad categories vary on how demand for the good is responding to changes in income?

Answer 22

1. normal goods
2. inferior goods

Question 23

Where there is an increase in income, there is an increase in the demand for _________

Answer 23

normal goods

Question 23

When there is an increase in income, there is a decrease in demand ________

Answer 23

inferior goods

Question 24

examples of inferior goods

Answer 24

Ukay-ukay clothing Jeepney rides Secondhand furniture

Question 25

examples of normal goods

Answer 25

New clothes Car Plane rides New furniture

Question 26

An increase in the demand for some goods or services, particularly for basic goods, results from an increasing population

Answer 26

Population Change

Question 27

Various events and seasons within the year may cause a movement on the demand curve for specific goods

Answer 27

Occasional or Seasonal Products

Question 28

interchanged with another good, usually offered at a lower price, thus making them more attractive to customers

Answer 28

Substitute and Complementary Goods

Question 29

If customers expect the price of a product or service to increase (or decrease) in the future, it may lead to an increase (or decrease) in current demand

Answer 29

Expectations of Future Prices

Question 30

a relation showing the quantities of goods producers are willing and able to sell at various prices at a given period, and other things are held constant

Answer 30

Supply

Question 31

the supply of an individual producer

Answer 31

Individual supply

Question 31

supply from all producers in the market for that good.

Answer 31

market supply

Question 32

table listing the various prices of a product and the specific quantities supplied at each of these prices at a given time

Answer 32

supply schedule

Question 33

curve or line showing the quantities of a particular good supplied at various prices during a given period and other things held constant

Answer 33

supply curve

Question 34

shows the total quantities of all producers at various prices

Answer 34

market supply curve

Question 35

the amount offered for sale at a specific price, as shown by the point on the given supply curve.

Answer 35

quantity supplied

Question 36

states that the quantity of product supplied during a period is usually directly related to its price, other things constant

Answer 36

Law of Supply

Question 37

mathematical notation that links the dependent variable, quantity supplied (QS), with various independent variables that determine quantity supplied.

Answer 37

supply function

Question 38

formula for supply function

Answer 38

QS = c + dP

Question 39

If there is movement from one point to another along the same supply curve, there is a _________

Answer 39

change in quantity supplied (∆QS)

Question 40

What are the 6 forces/independent variaibles that cause changes to the supply curve?

Answer 40

1. Optimization in the Use of Factors of Production 2. Technological Change 3. Future Expectations 4. Number of Sellers 5. Weather Conditions 6. Government Policies

Question 41

An increase in supply will happen when there is an optimization of the utilization of production factors (economic resources)

Answer 41

Optimization in the Use of Factors of Production

Question 42

There is an increase in the supply brought by the introduction of cost-reducing innovations.

Answer 42

Technological Change

Question 43

These can impact not just buyers but also sellers

Answer 43

Future Expectations

Question 44

A greater supply of products and services will be available if more sellers are in the market – such a variable directly impacts the quantity supplied.

Answer 44

Number of Sellers

Question 45

There is a reduction in the supply of agricultural commodities during natural disasters

Answer 45

Weather Conditions

Question 46

When quotas and tariffs on imported products are removed, there is an effect on the supply, and when restrictions and quotas or tariffs are lowered, there is a boost in the supply of goods in the market due to imports

Answer 46

Government Policies

Question 47

when the quantity consumers are willing and able to buy equals the quantity producers are willing and able to sell.

Answer 47

Market equilibrium

Question 48

equates quantity demanded with quantity supplied

Answer 48

Equilibrium price (market-clearing price)

Question 49

a mismatch between the quantity demanded and quantity supplied as the market seeks equilibrium

Answer 49

Disequilibrium (Market Disequilibrium)

Question 50

the difference between what consumers are willing and able to pay for a given quantity of a good and what they pay

Answer 50

Consumer surplus

Question 51

As supply remains constant, an increase (or decrease) in demand increases (or decreases) both equilibrium price and quantity.

Answer 51

Changes in Demand

Question 52

If there is an increase (or decrease) in supply, as demand remains constant, it will decrease (or increase) in the equilibrium price and increase (or decrease) in the number of goods sold in the market

Answer 52

Changes in Supply

Question 53

The changes in both supply and demand result in a combination of individual changes

Answer 53

Complex Cases

Question 54

When there is an increase in supply and a decrease in demand

Answer 54

Both equilibrium quantity and equilibrium price will fall: S’ < D’. The equilibrium quantity will rise, and the equilibrium price will fall: S’ > D’.

Question 55

When there is a decrease in supply, and there is an increase in demand

Answer 55

The equilibrium quantity will fall, and the equilibrium price will rise: S’ > D’. Both equilibrium quantity and equilibrium price will rise: S’ < D’.

Question 56

When there is an increase in both supply and demand

Answer 56

The equilibrium quantity will rise, and the equilibrium price will fall: S’ > D’. Both equilibrium quantity and equilibrium price will rise: S’ < D’.

Question 57

When there is a decrease in both supply and demand

Answer 57

Both equilibrium quantity and equilibrium price will fall: S’ < D’. The equilibrium quantity will fall, and the equilibrium price will rise: S’ > D’.

Question 58

the government’s specification of minimum or maximum prices for certain goods and services when the government considers existing prices disadvantageous to the producer or consumer.

Answer 58

Price controls

Question 59

2 types of price control

Answer 59

1. price floor 2. price ceiling

Question 60

a legal minimum price below which a product cannot be sold

Answer 60

price floor(floor price)

Question 61

a legal maximum selling price above which a product cannot be sold.

Answer 61

price ceiling

Question 62

in the market – producers are taking advantage of the consumers since they are selling their products at higher prices in illegal/black markets, and consumers are left with no option but to purchase products at a price higher than the price ceiling.

Answer 62

shortage

Question 63

states that price decreases when supply is greater than demand and increases when demand is greater than supply

Answer 63

Law of Supply and Demand