Supply and Demand Concepts

These flashcards cover key concepts regarding supply, demand, equilibrium, and market dynamics based on the lecture notes.

What happens to supply when technology improves?

Supply increases or shifts out.

What is the theory of equilibrium price?

It is the price where quantity demanded equals quantity supplied.

What occurs when the price of apples is set too high?

Excess supply occurs.

What is excess demand?

When quantity demanded is greater than quantity supplied.

What action does the auctioneer take in response to excess supply?

Lowers the price.

What happens to quantity demanded when prices decrease?

Quantity demanded increases.

What occurs at equilibrium price?

The market clears with no excess supply or demand.

What is the relationship between supply and demand curves?

Supply curves slope upward; demand curves slope downward.

What does an increase in demand do to equilibrium price?

Equilibrium price increases.

What happens to equilibrium quantity when demand decreases?

Equilibrium quantity decreases.

What happens when there's an increase in supply?

Equilibrium price decreases and quantity increases.

What is the effect of a decrease in supply?

Equilibrium price increases; equilibrium quantity decreases.

If wages increase for workers, what happens to the supply curve?

The supply curve shifts to the left.

What is a normal good in terms of income increases?

Demand for normal goods increases as income increases.

What does technological change typically do to supply?

Shifts the supply curve to the right.

What is one reason prices change in the market?

Changes in consumer demand or changes in supply conditions.

How do auctioneers react to excess demand?

They raise the price.

What happens when bad weather affects agricultural production?

Supply shifts to the left, increasing prices.

What does equilibrium represent in economics?

A balance between supply and demand.

What characterizes excess supply?

Quantity supplied is greater than quantity demanded.

When can prices stabilize after rising?

When excess supply is eliminated and supply equals demand.