Supply and Demand Review Answer Key

Market stays at the same equilibrium price

Suppliers easily change output with price

Quantity demanded changes a lot with price

Quantity demanded barely changes with price

decreases in an inverse relationship

first rises then falls unpredictably

increases in a direct relationship

stays constant over time

demand curve shifts to the right

quantity supplied equals quantity demanded

supply curve shifts to the left

price ceilings are enforced

A change in substitute prices

A change in the good’s price

A change in consumer income

A change in tastes and preferences

Rise in complement price

Decrease in number of buyers

Increase in consumer income

Expectations of lower future prices

increase because of expectations

decrease due to joint consumption

stay constant in the short run

increase due to higher quality

Improved production technology

Expectations of higher future prices

Fewer producers in the market

Higher input prices for firms

increase due to efficiency gains

shift right then return later

remain unchanged for necessities

decrease because production is costly

shift demand to the left

cause a surplus to disappear

reduce demand immediately

increase supply available

cut prices to clear inventory

exit the market permanently

increase current supply immediately

reduce current supply to sell later