1) What is the law of demand? Other things remaining the same, if the price of a good rises, the quantity demanded of that good decreases; and if the price of a good falls the quantity demanded of that good increases.
2) What leads to a decrease in the quantity demanded of a good or service? Because people are always looking to save money and be on a budget.
3) Explain the difference between a change in demand and a change in quantity demanded. What leads to each of these changes? A change in demand is when the consumer either wants, or doesn’t want a item. The change in quantity demanded is how much the manufacturer has on hand, verse the rate of sale.
4) List the factors that change demand and shift the demand curve. Tell what happens to demand and the demand curve when there is an increase in the factor.
The change depends on the relationship between the quantity demanded of a good and its price when all the other influences on buying plan remains the same. When the price of a good falls, the quantity demanded increases.
5) Computers are a complement to computer software. Suppose the price of a computer falls. How does this fall in price affect the demand for computer software and the demand curve for computer software?
If the price of computers falls, then the software would have to fall too. No one is going to want to spend little money on a computer, and then turn around and pay for expensive software.
6) What is the difference between a normal good and an inferior good? Give an example of each. A normal good – a good for which demand increases when income increases and demand decreases when income decreases. Inferior good – a good for which demand decreases when income increases and demand increases when income decreases. Normal good: chicken less pasta. Inferior: Pasta less chicken.
7) What leads to a decrease in the quantity supplied of a good or service? An increases in spending by the consumer. More demand than supply.
8) What is the difference between quantity supplied and supply? Supply is the amount of a product offered for sale at all possible prices that can succeed in a market; while quantity supplied is the amount that producers are willing and able to supply are a certain price.
9) List the factors that change supply and shift the supply curve. Tell what happens to supply and the supply curve when there is an increase in the factor. The relationship between the quantities supplied of a good and its price when all the other influences on selling plans remain the same.
10) What are substitutes in production? A good that can be produced in place of another good.
11) suppose that the number of companies selling computer software decreases. How does this change affect the supply of computer software and the supply curve of computer software? Decreases in sales means more supplies on the shelves which means lowing prices.
12) Suppose that the productivity used to produce computers advances. How does this change affect the supply of computers and the supply curve of computers? They can then increases the amount of computers that they are able to produce and it becomes more efficient. The supply curve would go up.
13) When does a shortage occur? A shortage occurs when the demand is higher than the supply.
14) When does a surplus occur? A surplus occurs when the supply is higher than the demand.
15) At prices above the equilibrium price, what occurs? Above the equilibrium means that the demand is higher than the supply.
16) Why does an increase in supply lead to lower prices? Because the product is not selling at its regular price, so they have to decrease price to get it to sell.
17) Smart phones are becoming less expensive as new
