Demand and Supply

What factors can cause a shift in the supply curve?

• Seasonal weather patterns

• Global trade agreements

• Changes in consumer preferences

• Factors that can cause a shift in the supply curve include changes in production costs, technology, number of suppliers, government policies, and future price expectations.

Answer explanation

The correct answer highlights key factors that shift the supply curve, such as production costs, technology, and government policies, which directly affect supply levels in the market.

Discuss the impact of government price controls on market equilibrium.

• Government price controls always lead to increased production.

• Government intervention guarantees fair prices for all consumers.

• Government price controls disrupt market equilibrium by causing shortages or surpluses.

• Price controls have no effect on supply and demand.

What is wrong with the statement: "Demand refers to the willingness of buyers to purchase different quantities of a good at different prices during a specific time period"

• Instead of “demand”, it should be “quantity demanded”.

• Instead of “willingness”, it should be “ability”.

• Demand refers to the willingness and ability of buyers, not just willingness.

• There is nothing wrong with the statement

"The price of 1 kg apples, which was $5 last month, is $6 today"

 True or False: The demand curve for apples must have shifted rightward between last month and today.

• TRUE

• FALSE

Consider the market for cereal in San Francisco, where there are over a thousand stores that sell cereal at any given moment. Suppose the Surgeon General issues a public statement saying that consuming cereal is bad for your health.

Holding all else constant, this will lead to a:

• Change in demand

• Change in supply

• Change in demand and change in supply

• No change in demand and supply

Answer explanation

Answer 3: Change in Demand.

This public statement will lead to a leftward shift in the demand curve. This is because when consumers find out that eating cereal is bad for their health, they will decrease their consumption of cereal.

The supply curve does not shift because none of the factors affecting supply have changed.

Beef supplies are sharply reduced because of drought in the beef-raising states, and consumers turn to pork as a substitute for beef. The supply curve for beef should shift _________, to reflect the drought. This causes the price of beef to rise, and the quantity consumed to decrease.

• Rightward

• Leftward

Answer explanation

The supply curve for beef should shift leftward (or upward), to reflect the drought. This causes the price of beef to rise, and the quantity consumed to decrease.

We would not move the demand curve here. The decrease in quantity demanded is due to the price of beef rising, creating the shift of the supply curve.

______________ refers to the willingness and ability of buyers to purchase different quantities of a good at different prices during a specific time period whereas __________________ refers to a specific number of units buyers want to buy at a specific price.

• Demand/ Quantity Demand

• Quantity Demand/ Demand

• Supply/ Quantity supply

What happens to the equilibrium price and quantity when demand increases and supply decreases?

• Equilibrium price increases and equilibrium quantity decreases

• Equilibrium price decreases and equilibrium quantity increases

• Equilibrium price increases and equilibrium quantity increases

• Equilibrium price decreases and equilibrium quantity decreases

What is a shortage?

• A situation in which the quantity of a good or service demanded by consumers exceeds the quantity supplied by producers

• A situation in which the quantity of a good or service supplied by producers exceeds the quantity demanded by consumers

• A situation in which the quantity of a good or service demanded by consumers equals the quantity supplied by producers

• A situation in which the quantity of a good or service demanded by consumers is equal to zero

What is the definition of supply?

• The quantity of a good or service that producers are willing and able to sell at a given price

• The quantity of a good or service that consumers are willing and able to buy at a given price

• The price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers

• The price at which the quantity of a good or service demanded by consumers exceeds the quantity supplied by producers