youtube assessment

Joseph Hasan
Econ
25 oct 2024
1. What is a demand curve?

- A demand curve is a graphical representation that shows the relationship between the
price of a good or service and the quantity demanded by consumers at those prices.
Typically, it slopes downward from left to right.
2. What are the 3 reasons a demand curve is downward sloping? Explain Each
Reason.
- Substitution Effect: When the price of a good decreases, it becomes cheaper
compared to substitutes, leading consumers to purchase more of it instead of
alternatives.
- Income Effect: A lower price increases consumers' purchasing power, allowing them
to buy more goods with the same income.
- Diminishing Marginal Utility: As consumers buy more of a product, the satisfaction

(utility) they gain from each additional unit decreases. Thus, they are only willing to buy
more at lower prices.
3. What are the 5 shifters or determinants of demand? Explain Each Reason.

- Income: When consumer income increases, demand for normal goods increases,
while demand for inferior goods decreases.
- Consumer Preferences: Changes in tastes and preferences can shift demand. For
example, if a product becomes popular, demand will increase.
- Number of Buyers: An increase in the number of consumers in the market generally

leads to an increase in demand.
- Price of Related Goods: The demand for a good can increase if the price of a
substitute rises or the price of a complement falls.
- Expectations: If consumers expect prices to rise in the future, current demand may
increase as they try to purchase before prices go up.
4. What happens to the demand when the price goes down?
- Generally, when the price goes down, the quantity demanded increases, leading to a
movement along the demand curve.
5. What causes movement along the demand curve?

- Movement along the demand curve is caused by a change in the price of the good
itself.
6. What causes movement of the entire demand curve?

- The entire demand curve shifts due to changes in determinants such as consumer
income, preferences, number of buyers, prices of related goods, or expectations.
Supply
1. Why is a supply curve upward sloping?

- A supply curve is upward sloping because as the price of a good increases, producers
are willing to supply more of it to maximize profits.
2. What are the 5 shifters of supply? Explain Each Reason.

- Production Costs: If the cost of production increases (e.g., higher wages or
materials), supply decreases.
- Technology: Advancements in technology can make production more efficient,
increasing supply.
- Number of Sellers: An increase in the number of sellers in the market typically
increases the overall supply.
- Expectations: If producers expect prices to rise, they might reduce current supply to
sell more later at higher prices.
- Government Policies: Taxes, subsidies, and regulations can either increase or
decrease supply depending on the nature of the policy.
3. What happens to supply when the price increases?

- When the price increases, the quantity supplied generally increases as producers are
incentivized to produce more.
4. What causes movement along the supply curve?

- Movement along the supply curve is caused by a change in the price of the good itself.
5. What causes movement of the entire supply curve?

- The entire supply curve shifts due to changes in the determinants of supply, such as
production costs, technology, number of sellers, expectations, or government policies.
6. What is set when the demand and supply curves come together?
- The intersection of the demand and supply curves sets the market equilibrium price
and quantity.
7. What causes a surplus?

- A surplus occurs when the quantity supplied exceeds the quantity demanded at a
given price, often due to prices being set too high.
8. What causes a shortage?

- A shortage occurs when the quantity demanded exceeds the quantity supplied at a
given price, usually because prices are set too low.
BONUS (Optional)
What is the difference between scarcity and a shortage? Why are they not the
same?
- Scarcity refers to the fundamental economic problem where resources are limited and
cannot meet all human wants. It is a permanent condition of all resources.
- Shortage occurs when there is a temporary imbalance where demand exceeds supply
at a certain price, often due to price controls or sudden changes in demand.
These concepts are related, but scarcity is a constant issue in economics, while a
shortage can occur and resolve over time based on market conditions.

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Joseph Hasan

1. What is a demand curve?

- Diminishing Marginal Utility: As consumers buy more of a product, the satisfaction

3. What are the 5 shifters or determinants of demand? Explain Each Reason.

- Number of Buyers: An increase in the number of consumers in the market generally

5. What causes movement along the demand curve?

6. What causes movement of the entire demand curve?

1. Why is a supply curve upward sloping?

2. What are the 5 shifters of supply? Explain Each Reason.

3. What happens to supply when the price increases?

4. What causes movement along the supply curve?

5. What causes movement of the entire supply curve?

7. What causes a surplus?

8. What causes a shortage?

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