Econ quiz 2 other important stuff

What causes a movement along the demand curve?

A change in the good's own price. Price increases cause quantity demanded to decrease, while price decreases cause quantity demanded to increase.

What causes a movement along the supply curve?

A change in the good's own price. Price increases cause quantity supplied to increase, while price decreases cause quantity supplied to decrease.

What causes the entire demand curve to shift?

A change in something other than the good's own price, such as income, tastes, expectations, number of consumers, or prices of related goods.

What causes the entire supply curve to shift?

A change in something other than the good's own price, such as production costs, technology, expectations, number of producers, or prices of related goods.

What are the five factors that shift demand?

Prices of related goods, consumer income, tastes, expectations, and number of consumers.

What are the five factors that shift supply?

Input prices, prices of related goods or services, technology, expectations, and number of producers.

What happens when demand increases?

Demand shifts right. Equilibrium price increases and equilibrium quantity increases, assuming supply stays constant.

What happens when demand decreases?

Demand shifts left. Equilibrium price decreases and equilibrium quantity decreases, assuming supply stays constant.

What happens when supply increases?

Supply shifts right. Equilibrium price decreases and equilibrium quantity increases, assuming demand stays constant.

What happens when supply decreases?

Supply shifts left. Equilibrium price increases and equilibrium quantity decreases, assuming demand stays constant.

What happens when both supply and demand increase?

Equilibrium quantity increases, but equilibrium price is uncertain because it depends on which curve shifts more.

What happens when both supply and demand decrease?

Equilibrium quantity decreases, but equilibrium price is uncertain because it depends on which curve shifts more.

What happens when demand increases and supply decreases?

Equilibrium price increases, but equilibrium quantity is uncertain because it depends on which curve shifts more.

What happens when demand decreases and supply increases?

Equilibrium price decreases, but equilibrium quantity is uncertain because it depends on which curve shifts more.

What happens to demand for a normal good when income increases?

Demand increases and shifts right because consumers can afford to buy more.

What happens to demand for an inferior good when income increases?

Demand decreases and shifts left because consumers switch to alternatives they prefer when they have more income.

What happens to demand for a substitute when the price of another good increases?

Demand for the substitute increases. Example: If Coke becomes more expensive, demand for Pepsi increases.

What happens to demand for a complement when the price of another good increases?

Demand for the complement decreases. Example: If printers become more expensive, demand for ink cartridges decreases.

What makes demand elastic versus inelastic?

Elastic demand means quantity demanded changes by a larger percentage than price (elasticity greater than 1). Inelastic demand means quantity demanded changes by a smaller percentage than price (elasticity less than 1).

What factors determine price elasticity of demand and supply?

Demand elasticity depends on available substitutes, necessity versus luxury, share of income spent, and time. Supply elasticity depends on how easily producers can increase production and how much time they have to adjust.