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ECN 104 Lecture Notes - Lecture 3: Demand Curve, Economic Equilibrium, Economic Surplus

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raspberrysardine417

22 Sep 2016

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Ryerson University

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Document Summary

A supply schedule shows how much of a good or service would be supplied at different prices. A supply curve shows graphically how much of a good or service people are willing to sell at any given price. The adoption of improved cotton-growing technology generated an increase in supply a rise in the quantity supplied at any given price. This event is represented by the two supply schedules and their corresponding supply curves: one showing supply before the new technology was adopted, the other showing supply after the new technology was adopted. Technology adoption in cotton-growing business more cotton producers. A shift of the supply curve is a change in the quantity supplied of a good at any given price. A movement along the supply curve is a change in the quantity supplied of a good that is the result of a change in that good"s price.

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Related Questions

What is the difference between an 'increase in supply' and an 'increase in quantity supplied'?

A) There is no difference between the two terms; they both refer to a movement along a given supply curve.

B) There is no difference between the two terms; they both refer to a shift of the supply curve.

C) An 'increase in supply' means the supply curve has shifted to the right while 'an increase in the quantity supplied', means at any given price supply has increased.

D) An 'increase in supply' means the supply curve has shifted to the left while an 'increase in the quantity supplied' refers to a movement along a given supply curve in response to an increase in price.

peachwildebeest710

What is the difference between an "increase in supply" and an "increase in quantity supplied"?

A) There is no difference between the two terms; they both refer to a movement along a given supply curve.

B) There is no difference between the two terms; they both refer to a shift of the supply curve.

C) An "increase in supply" means that the supply curve has shifted to the right while an "increase in the quantity supplied" means at any given price supply has increased.

D) An "increase in supply" means that the supply curve has shifted to the right while an "increase in the quantity supplied" refers to a movement along a given supply curve in response to an increase in price.

aquamarinebear50

The primary difference between a change in supply and a change in the quantity supplied is:
Choose one answer.
a. a change in quantity supplied is a shift in the supply curve, and a change in supply is a movement along the supply curve.
b. both a change in quantity supplied and a change in supply are movements along the supply curve, only in different directions.
c. a change in quantity supplied is a movement along the supply curve, and a change in supply is a shift of the supply curve.
d. a change in supply is a movement to the left along the supply curve and a change in quantity supplied is a movement to the right along the supply curve.

Question 2
What is the difference between a shortage and scarcity?
Choose one answer.
a. Scarcity will always exist because choices must be made, but a shortage will only exist if the price is kept below the equilibrium level.
b. Scarcity is a result of two or more alternative uses and will always exist, and quantities of supply and demand adjusting to flexible prices will create shortages.
c. A surplus will exist when a good is scarce; a shortage merely implies that there isn't as much of something as people would like, which is nearly always the case.
d. There is no distinction between the two. They are the same thing.

Question 3
A decrease in supply means:
Choose one answer.
a. a shift to the left of the entire supply curve.
b. moving downward (to the left) along the supply curve with lower prices.
c. less will be demanded at every price.
d. more will be supplied at every price.

Question 4
A decrease in demand, with no change in supply, will lead to ________ in equilibrium quantity and ________ in equilibrium price.
Choose one answer.
a. an increase; an increase
b. an increase; a decrease
c. a decrease; an increase
d. a decrease; a decrease

Question 5
After graduation from college you will receive a substantial increase in your income from a new job. If you decide that you will purchase more T-bone steak and less hamburger, then for you hamburger would be considered a( n ):
Choose one answer.
a. normal good.
b. substitute good.
c. complementary good.
d. inferior good.

Question 6
There is equilibrium in the market when:
Choose one answer.
a. there is no shortage.
b. there is no surplus.
c. price is established where the supply curve and the demand curve intersect.
d. all of the above are true.

Question 7
Which would not cause the supply curve to shift?
Choose one answer.
a. a change in technology
b. a change in factor costs
c. a change in the price of the good
d. a change in the prices of related goods

Question 8
Given that meat and potatoes are complementary goods, if the price of meat decreases substantially, there would be:
Choose one answer.
a. an increase in the demand for potatoes.
b. an increase in the quantity of potatoes demanded.
c. a decrease in the demand for potatoes.
d. no change in the demand for potatoes.

Question 9
Given that milk and cookies are complements, suppose the price of flour (an ingredient in cookies) rises. What happens in the market for milk?
Choose one answer.
a. The equilibrium price and quantity rise.
b. The equilibrium price rises and the equilibrium quantity falls.
c. The equilibrium price and quantity fall.
d. The equilibrium price falls and the equilibrium quantity rises.

Question 10

A temporary price of $2 in this market would result in:
Choose one answer.
a. a surplus of 8,000 bushels.
b. a shortage of 8,000 bushels.
c. a shortage of 10,000 bushels.
d. a surplus of 10,000 bushels.

Question 11
The price of oranges rises. What happens in the market for apples, which are a substitute for oranges?
Choose one answer.
a. The equilibrium price falls, and the equilibrium quantity rises.
b. The equilibrium price rises, and the equilibrium quantity falls.
c. The equilibrium price and quantity rise.
d. The equilibrium price and quantity fall.

Question 12
A market surplus occurs if the:
Choose one answer.
a. price is below the equilibrium price.
b. price is equal to the equilibrium price.
c. equilibrium price is above the actual price.
d. equilibrium price is below the actual price.