Ch 4 - Demand and Supply: The Basics

when prices are low, people are easily able to afford it since their budget would allow it.

are the opposite of taxes and help reduce price per unit.

Changes in demand are when the ________ would shift upwards or downwards.

The cost of production (land, labor, capital) has a(n) ________ on the supply.

This occurs when there is a shortage or surplus in the market.

would only exist when the quantity supplied is greater than the quantity demanded.

has a direct relationship with changes in the price of a particular good.

When products price increase, they tend to increase in relative to other products.

When supply is constant and only demand increases, ________ and quantity increases.

tends to decline (shift downwards) for inferior goods with an increase in consumer income.

in supply is due to the determinants of supply.

states that when prices increase, the supply increases as well direct relation

are added up to the unit cost of production, thus making it more expensive.

only occurs due to change in price movement along the curve.

are usually categorized into 2 types, inferior and normal.

pays a major role in the determination of the price.

are the factors that influence the supplier to offer more or fewer goods at the same price.

Since price has a different impact on both buyers and sellers, the ________ is different than a demand curve.

When supply is constant and only demand decreases, ________ and quantity decreases.

for a product is the quantity the customers are willing and able to pay for each and every price.

When demand is constant and only supply increases, ________ and quantity decreases.

When demand is constant and only supply decreases, ________ and quantity increases.

when prices are low, people are easily able to afford it since their budget would allow it

when products price increase, they tend to increase in relative to other products

As more units of a product are consumed, the satisfaction/utility it provides tends to decline

Has an inverse relationship with changes in the price of a particular good

the factors that cause consumers to buy more or less at the same price; these are substitutes, preferences, population, income, complements, and expectations

has a direct relationship with changes in the price of a particular good

price at which quantity supplied equals quantity demanded

This occurs when there is a shortage or surplus in the market

This rule states that when there is a simultaneous shift in both demand and supply, either price or quantity would stay indeterminate