Microeconomics – 2. Supply, Demand and Equilibrium

  1. Why does quantity demanded tend to fall as price rises?
  2. Suppose the average income of consumers rises. What happens to the demand curve?
  3. Suppose you are analyzing the market for beef and the price of chicken rises. What do you think will happen to the beef demand curve?
  4. Explain the difference between a change in demand versus a change in the quantity demanded.
  5. The market demand curve is the horizontal sum of what?
  6. Explain the Law of Supply.
  7. Name three shift factors influencing the supply curve.
  8. Suppose your company comes up with a new cost-saving, computerized process for making corn flakes. What do you think will happen to the supply curve?
  9. Suppose the price of labor or raw materials increases for corn flakes manufacturers. What happens to the supply curve?
  10. Illustrate a shortage, a surplus, and equilibrium using supply and demand curves.
  11. Illustrate a price floor for milk.
  12. Illustrate a price ceiling for wheat.
  13. Explain how the market mechanism answers these three questions: What goods are produced? For whom are goods produced? How are goods produced?
  14. Provide several examples of how the supply and demand framework can help you save or make money in your professional or personal life.

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