All Flashcards
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 are the differences between a change in quantity demanded and a change in demand?
A change in quantity demanded is a movement along the demand curve due to a change in price, while a change in demand is a shift of the entire curve due to factors other than price.
What are the differences between a change in quantity supplied and a change in supply?
A change in quantity supplied is a movement along the supply curve due to a change in price, while a change in supply is a shift of the entire curve due to factors other than price.
What are the key differences between price floors and price ceilings?
Price floors are minimum prices set above the equilibrium, leading to surpluses, while price ceilings are maximum prices set below the equilibrium, leading to shortages.
Compare and contrast tariffs and quotas.
Both tariffs and quotas restrict international trade. Tariffs are taxes on imports, while quotas are quantity limits on imports.
What is the difference between consumer surplus and producer surplus?
Consumer surplus is the difference between what consumers are willing to pay and what they actually pay, while producer surplus is the difference between what producers receive and their cost of production.
Differentiate between elastic and inelastic demand.
Elastic demand means quantity demanded is sensitive to price changes, while inelastic demand means quantity demanded is not very sensitive to price changes.
Differentiate between elastic and inelastic supply.
Elastic supply means quantity supplied is sensitive to price changes, while inelastic supply means quantity supplied is not very sensitive to price changes.
What are the differences between a normal good and an inferior good?
Demand for normal goods increases as consumer income rises, while demand for inferior goods decreases as consumer income rises.
What is the difference between substitute goods and complementary goods?
Substitute goods can be used in place of each other (e.g., tea and coffee), while complementary goods are used together (e.g., coffee and sugar).
Compare and contrast short-run and long-run supply elasticity.
Short-run supply elasticity is generally lower because firms have limited ability to adjust production in the short term, while long-run supply elasticity is higher because firms can make more significant adjustments over time.
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.