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22 May 2018

The factors that cause shifts in supply and the importance of demand are examined.

  • What is the law of supply, and what are the factors that cause shifts in supply?
  • What is the law of demand and why is it important?
  • Why does an increase in the price of goods and services trigger a decrease in demand?

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Trinidad Tremblay
Trinidad TremblayLv2
22 May 2018

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Principles of Economics
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Substitution effect
Real income effect
Income effect
Price effect


If the cost of computer components falls, then
Select correct option:
The demand curve for computers shifts to the right.
The demand curve for computers shifts to the left.
The supply curve for computers shifts to the right
The supply curve for computers shifts to the left


The short run, as economists use the phrase, ischaracterisedby:
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All inputs being variable.
At least one fixed factor of production and firms neitherleavingnor entering the industry.
No variable inputs - that is, all of the factors of productionarefixed.
A period where the law of diminishing returns does not hold.


When an industry's raw material costs increase, otherthingsremaining the same:
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The supply curve shifts to the left.
The supply curve shifts to the right.
Output increases regardless of the market price and the supplycurveshifts upward.
Output decreases and the market price also decrease.


The law of diminishing returns assumes:
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There are no fixed factors of production.
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Utility is maximised when marginal product falls.
Some factors of production are fixed.


Price floor results in:
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Equilibrium
Excess demand
Excess supply
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If a decrease in price increases total revenue:
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Demand is elastic
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Supply is inelastic


If the income elasticity of demand is 1/2, the good is:
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A luxury.
A normal good (but not a luxury).
An inferior good.
A Giffen good.


Other things equal, expected income can be used as a directmeasureof well-being:
Select correct option:
No matter what a person's preference to risk.
If and only if individuals are not risk-loving.
If and only if individuals are risk averse.
If and only if individuals are risk neutral.


When drawing demand and supply curves, economists are assumingthatthe primary influence on production and purchasingdecisionsis:
Select correct option:
Price
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The overall state of the economy
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The law of supply and demand asserts that

a. demand curves and supply curves tend to shift to the right as time goes by.

b. the price of a good will eventually rise in response to excess demand for that good.

c. when the supply curve for good shifts, the demand curve for that good shifts in response.

d. the equilibrium price of a good will be rising more often than it will be falling.

 

The law of supply and demand asserts that:
 
(i) demand curves and supply curves tend to shift to the right as time goes by.
(ii)  the price of a good will eventually rise in response to excess demand for that good.
(iii) when the supply curve for a good shifts, the demand curve for that good shifts in response.
(iv) the equilibrium price of a good will be rising more often than it will be falling.

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