UNIT 2: SUPPLY AND DEMAND

Question 1

What’s the difference between Demand and Quantity and Demanded?

Answer 1

DEMAND: shows quantity demanded at certain prices

QUANTITY DEMANDED: quantity that buyers are willing to purchase at a particular price

Question 2

Finish the sentence:

As price increases______

Answer 2

Quantity demanded decreases

Question 3

What causes demand curve to shift? P.E.P.T.I

Answer 3

1.Price of Related Goods
2. Income
3.preference/taste
4. Expectations
5.Population

Question 4

Explain the substitution effect

Answer 4

SUBSTITUTION EFFECT: as price rises, we substitute, similar goods in place as price falls, we stock up on more of a desired product.

Question 5

Explain compliment good? Provide an example

Answer 5

An increase in price of a product, a conpliments another product was directly affect the demand for the product, a compliments

Question 6

Explain the difference between supply and quantity supplied

Answer 6

SUPPLY: represents the behaviour of sellers

QUANTITY SUPPLIED: the quantity the producers are willing to sell at a particular price

Question 7

What causes supply shift to change? T.I.P.E.N?

Answer 7

1. Technology
2. Input prices
3. Price of related goods
4. Expectations
5. Number of sellers