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Supply and Demand Together: One-sided Shifts quiz

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  • What is the first step in analyzing a shift in demand or supply?
    The first step is to identify whether the event is causing a demand shift, a supply shift, or both.
  • When demand increases, what happens to equilibrium price and quantity?
    Both equilibrium price and quantity increase when demand increases.
  • What direction does the demand curve shift when there is a decrease in demand?
    The demand curve shifts to the left when demand decreases.
  • How does a decrease in demand affect equilibrium price and quantity?
    A decrease in demand lowers both the equilibrium price and the equilibrium quantity.
  • What graphical tool is used to distinguish between original and new equilibrium points?
    Circles are used for the original equilibrium and squares for the new equilibrium.
  • What happens to equilibrium price and quantity when supply increases?
    Equilibrium price decreases and equilibrium quantity increases when supply increases.
  • If input prices rise, causing a supply shift, which direction does the supply curve move?
    The supply curve shifts to the left when input prices rise.
  • What is the effect on equilibrium price and quantity when supply decreases?
    A decrease in supply raises the equilibrium price and lowers the equilibrium quantity.
  • Why is it important to label axes and curves consistently in supply and demand graphs?
    Consistent labeling helps clearly identify changes and compare original and new equilibriums.
  • What is the typical result of a technological advancement in an industry on the supply curve?
    Technological advancement shifts the supply curve to the right, increasing supply.
  • What are the four steps to analyze a shift in demand or supply?
    Identify the shift, decide the direction, find the new equilibrium, and compare the changes.
  • How do you determine if a shift is due to demand or supply?
    You analyze the determinants in the scenario to see if they affect consumers (demand) or producers (supply).
  • What happens to equilibrium price and quantity when demand decreases?
    Both equilibrium price and quantity decrease when demand decreases.
  • How does an increase in the price of a complementary good affect the demand curve?
    An increase in the price of a complementary good shifts the demand curve to the left.
  • What visual method is recommended for showing the direction of a curve shift on a graph?
    Draw an arrow from the original curve to the new curve to indicate the direction of the shift.