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In a supply and demand graph, what does the intersection of the supply and demand curves represent?
Market equilibrium.
On a supply and demand graph, show a surplus.
The quantity supplied is greater than quantity demanded at a given price, above the equilibrium price.
On a supply and demand graph, show a shortage.
The quantity demanded is greater than quantity supplied at a given price, below the equilibrium price.
What does a rightward shift of the demand curve indicate?
An increase in demand.
What does a leftward shift of the supply curve indicate?
A decrease in supply.
Given a graph showing a rightward shift in both supply and demand, what can be determined about the change in equilibrium quantity?
Equilibrium quantity increases.
Given a graph showing a leftward shift in both supply and demand, what can be determined about the change in equilibrium quantity?
Equilibrium quantity decreases.
Given a graph showing a rightward shift in demand and a leftward shift in supply, what can be determined about the change in equilibrium price?
Equilibrium price increases.
Given a graph showing a leftward shift in demand and a rightward shift in supply, what can be determined about the change in equilibrium price?
Equilibrium price decreases.
What is represented by the area between the demand curve and the equilibrium price?
Consumer surplus.
How does an increase in consumer income affect the market for normal goods?
It increases demand, leading to a higher equilibrium price and quantity.
How does a frost destroying a coffee bean crop affect the coffee market?
It decreases supply, leading to a higher equilibrium price and a lower equilibrium quantity.
How does a new health study showing the benefits of coffee affect the coffee market?
It increases demand, leading to a higher equilibrium price and quantity.
How does a surplus affect prices?
A surplus puts downward pressure on prices, as sellers try to reduce excess inventory.
How does a shortage affect prices?
A shortage puts upward pressure on prices, as buyers compete for limited goods.
If demand for electric cars increases, what happens to the equilibrium price and quantity?
Both equilibrium price and quantity of electric cars increase.
If the cost of producing smartphones decreases, what happens to the equilibrium price and quantity?
The equilibrium price decreases, and the equilibrium quantity increases.
How does increased automation in factories affect the supply of manufactured goods?
It increases supply, leading to a lower equilibrium price and a higher equilibrium quantity.
How would a tax on imported sugar affect the market for candy?
It would decrease the supply of candy, leading to a higher equilibrium price and a lower equilibrium quantity.
If a new technology makes wind energy cheaper, what happens to the equilibrium price and quantity of wind energy?
The equilibrium price decreases, and the equilibrium quantity increases.
Define market equilibrium.
The point where quantity supplied equals quantity demanded.
What is voluntary exchange?
Transactions where both consumers and firms benefit, maximizing utility and profits.
Define allocative efficiency.
Resources are used in the best way possible.
Define market disequilibrium.
A state where the market price or quantity is not at equilibrium, resulting in either a surplus or a shortage.
What is a market surplus?
Quantity supplied is greater than quantity demanded.
What is a market shortage?
Quantity demanded is greater than quantity supplied.
Define quantity demanded.
The total amount of a good or service consumers are willing and able to purchase at a specific price.
Define quantity supplied.
The total amount of a good or service that producers are willing and able to sell at a specific price.
Define determinants of demand.
Factors other than price that can influence the demand for a good or service (I-N-S-E-C-T).
Define determinants of supply.
Factors other than price that can influence the supply of a good or service (R-O-T-T-E-N).