Econ U2: Supply, Demand, & Equilibrium

Front

What happens to the supply curve when there is an improvement in technology?

Back

It shifts to the right.

Answer explanation

When there is an improvement in technology, the supply curve shifts to the right as it becomes easier and more efficient to produce goods, increasing the quantity supplied at each price level.

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DOK Level 1: Recall

Front

Which of the following factors can cause a shift in the demand curve?
Options:
Changes in consumer income,
Changes in the price of the good itself,
Changes in the quantity supplied,
Changes in production technology

Back

Changes in consumer income

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DOK Level 1: Recall

Front

If the price of coffee increases, what is likely to happen to the demand for tea?

Back

Demand increases

Answer explanation

If the price of coffee increases, consumers may switch to tea as a substitute, leading to an increase in the demand for tea.

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DOK Level 1: Recall

Front

How does an increase in the cost of raw materials affect the supply curve?

Back

It shifts to the left.

Answer explanation

An increase in the cost of raw materials leads to a decrease in supply, shifting the supply curve to the left.

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DOK Level 1: Recall

Front

Explain how a decrease in consumer income affects the demand curve for a normal good.

Back

The demand curve shifts to the left.

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DOK Level 2: Skill/Concept

Front

What is the likely effect on equilibrium price and quantity if there is an increase in both supply and demand?

Back

Equilibrium price remains unchanged, equilibrium quantity increases.

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DOK Level 2: Skill/Concept

Front

A new tax is imposed on producers of a good. Predict the changes in the supply curve and the new equilibrium.

Back

Supply curve shifts to the left, equilibrium price increases.

Answer explanation

Supply curve shifts to the left, equilibrium price increases. Supplier costs increase, which makes supply lower. Supply curve crosses Demand curve at a lower price.

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DOK Level 3: Strategic Thinking

Front

What is the Law of Demand?

Back

The Law of Demand states that, as the price of a good or service increases, the quantity demanded decreases, and vice versa.

Front

What is the Law of Supply?

Back

The Law of Supply states that as the price of a good or service increases, the quantity supplied by producers also increases, ceteris paribus.

Front

Define Equilibrium as it relates to Supply and Demand.

Back

Equilibrium is the point where the supply and demand curves intersect.