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Analyze the graph of a demand curve shifting to the right.
Indicates an increase in demand at every price point.
Analyze the graph of a supply curve shifting to the left.
Indicates a decrease in supply at every price point.
What does a movement *along* the demand curve indicate?
A change in quantity demanded due to a change in price.
What does a movement *along* the supply curve indicate?
A change in quantity supplied due to a change in price.
Analyze a graph showing a surplus.
The quantity supplied is greater than the quantity demanded at the given price.
Analyze a graph showing a shortage.
The quantity demanded is greater than the quantity supplied at the given price.
What happens to the equilibrium price and quantity when demand increases?
Both the equilibrium price and quantity increase.
What happens to the equilibrium price and quantity when supply decreases?
The equilibrium price increases, and the equilibrium quantity decreases.
How does a price floor above the equilibrium price appear on a supply and demand graph?
It is a horizontal line above the equilibrium point, creating a surplus.
How does a price ceiling below the equilibrium price appear on a supply and demand graph?
It is a horizontal line below the equilibrium point, creating a shortage.
What is the impact of a price floor on agricultural products?
It leads to a surplus of agricultural products.
What is the impact of a price ceiling on rental apartments?
It leads to a shortage of rental apartments.
How does a tax on producers affect the market equilibrium?
It decreases the supply, leading to a higher equilibrium price and lower equilibrium quantity.
How does a subsidy to consumers affect the market equilibrium?
It increases the demand, leading to a higher equilibrium price and higher equilibrium quantity.
What is the effect of rent control on the availability of housing?
Rent control, a type of price ceiling, often reduces the availability of housing.
What is the effect of minimum wage laws on the labor market?
Minimum wage laws, a type of price floor, can lead to a surplus of labor (unemployment).
How does a tariff on imported goods affect domestic producers?
A tariff increases the price of imported goods, benefiting domestic producers by increasing demand for their products.
How does a quota on imported goods affect domestic consumers?
A quota reduces the quantity of imported goods, leading to higher prices for domestic consumers.
What is the impact of a carbon tax on pollution levels?
A carbon tax increases the cost of polluting activities, incentivizing firms to reduce pollution.
What is the impact of government regulation on the safety of automobiles?
Government regulation can increase the safety of automobiles but may also increase their cost.
What is the definition of the demand curve?
The total of all individual demands at various price points.
What is the Law of Demand?
As price increases, quantity demanded decreases, and vice versa.
What is the definition of the supply curve?
The sum of all individual suppliers at different price points.
What is the Law of Supply?
As price increases, quantity supplied increases, and vice versa.
What is quantity demanded?
A specific point on the demand curve (the x-value). It changes when price changes.
What is quantity supplied?
A specific point on the supply curve (the x-value). It changes when price changes.
What is 'demand'?
Refers to the entire demand curve. It shifts due to factors other than price.
What is 'supply'?
Refers to the entire supply curve. It shifts due to factors other than price.
What is market equilibrium?
The point where the supply and demand curves intersect; quantity demanded equals quantity supplied.
Define equilibrium price and quantity.
The price and quantity at the intersection point of the supply and demand curves.