Supply, Demand, & Equilibrium

Question 1

Demand
Law of Demand (what type of relationship?)
Demand Curve (2)

Answer 1

consumer’s desire/ability to purchase a good

Inverse: price (up) quantity demanded (down)
price (down) quantity demanded (up)

slopes downward
amnt. consumers are willing to pay for good

Question 2

Quantity Demanded
Change in Demand
change on graph

Answer 2

slopes downward and changes along the curve

creates a new line
(right increases, left decreases)

Question 3

Shifts in Demand: abbreviation?
effect of price on related goods?
how does (I) affect consumer choices?
(E) aka?

Answer 3

TRIBE
T: change in taste/advertising

R: related/substitute/complimentary goods (change in price causes consumer to buy more of other good)

I: Income leads to changes in consuming normal/inferior goods

B: change in buyers/population

E: change in expectations (sale)

Question 4

Substitute good (ex)
Complementary good
for supply?
(2 examples of substitute/complimentary good)

Answer 4

alternative/replacement good (nike + Adidas)

go together (cars + gas)

red/green shirts + wheat/corn
beef/leather + lumber sawdust

Question 5

Inferior good (ex)
Normal good (ex)
how does rise in income affect both?

Answer 5

rise in income decreases demand
less desirable alt. (fast food, dollar tree)

rise in income increases demand
expensive alt. (Cheesecake Factory, CPK)

Question 6

Supply
Law of Supply (what type of relationship?)
Supply Curve (2)

Answer 6

amnt. of good a producer is willing/able to sell at given price

Positive: price (up) quantity supplied (up)
price (down) quantity supplied (down)

slopes upward
amnt. of good consumers are willing to sell at a certain price

Question 7

Quantity Supplied
Change in Supply

Answer 7

slopes upward and changes along the curve
creates a new line
(right increases, left decreases)

Question 8

Shifts in Supply: abbreviation?
(T) does what?
effect of price on related goods?
I what it stands for and definiton?
(N) aka?

Answer 8

TRINE
T: tech improvements (reduces costs of production)
R: related/substitute/complimentary goods (change in price causes consumer to buy more of other good)
I: input goods (goods used to make another good)
N: number of producers (competion) aka same people producing same product
E: change in expectations (sale)

Question 9

Input
Equilibrium
Equilibrium Price (aka?)

Answer 9

resources used to create goods/services
balance between supply and demand
price that matches the quantity supplied and demanded (price consumer and producer agreed on)

Question 10

Surplus
Shortage
how do they affect the price of a good?

Answer 10

quantity supplied exceeds quantity demanded
falls

quantity demanded exceeds quantity supplied
rises

Question 11

Demand
Shifts in Demand
implies a change in?

Answer 11

price
TRIBE (non price factors)

Question 12

Supply
Shifts in Supply
implies a change in?

Answer 12

price
TRINE (non price factors)

Question 13

Equilibrium graphing
(label 2)

Answer 13

label point where supply and demand intersect with E^1
label Price 1 and Quantity 1

Question 14

Surplus
Shortage
graphing?

Answer 14

above equlibrium point
below equlibrium point