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Microeconomics: Supply and Demand Basics

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Termini in questo insieme (12)

  • What are the assumptions about goods and resources in the given economy?

    The economy produces only 2 goods: guns and butter. Resources are fixed and not identical; some produce guns, others produce butter. Technology is fixed, no international trade, and output is measured annually.

  • What happens to demand and price when income \(I\) increases for a normal good?

    Demand increases, leading to an increase in both price \(P\) and quantity \(Q\).

  • How does an increase in income \(I_c\) affect demand for an inferior good?

    Demand decreases, causing a decrease in price \(P\) and quantity \(Q\).

  • What is the effect of an increase in the price of a substitute good \(P_s\) on demand?

    Demand increases, leading to higher price \(P\) and quantity \(Q\).

  • How does an increase in the price of a complement good \(P_c\) affect demand?

    Demand decreases, resulting in lower price \(P\) and quantity \(Q\).

  • What is the effect of an increase in population \(N_c\) on demand?

    Demand increases, causing an increase in price \(P\) and quantity \(Q\).

  • What happens to supply when wages \(w\) increase?

    Supply decreases, which increases price \(P\) and decreases quantity \(Q\).

  • How does an increase in capital \(K\) affect supply?

    Supply increases, leading to a decrease in price \(P\) and an increase in quantity \(Q\).

  • What is the effect of an increase in technology \(T\) on supply?

    Supply increases, causing price \(P\) to decrease and quantity \(Q\) to increase.

  • How does an increase in the number of producers \(N_p\) affect supply?

    Supply increases, resulting in lower price \(P\) and higher quantity \(Q\).

  • What is the difference between a change in quantity supplied and a change in supply?

    A change in quantity supplied is movement along the supply curve due to price changes. A change in supply is a shift of the supply curve caused by changes in determinants other than price.

  • What causes a shift in the supply curve?

    Changes in determinants like wages, capital, technology, or number of producers cause the supply curve to shift.