# File - Economics - Knoche

```Supply &amp; Demand
Section 5.2
Define quantity demanded (Qd) - the amount of a good or service that consumers are
willing and able to buy at a specific price.
Define demand - the amount of a good or service that consumers are willing and able to buy at all prices
in a given period.
Explain how the two terms above are different in your own words?
What is the law of demand? an economic law stating that as the price of a good or service increases, the
quantity demanded decreases, and vice versa
Explain the income effect on demand. Because of scarcity, people’s incomes are limited. If the price of
a good or service increases, they will not be able to continue to buy the same quantity as they did at the
original price.
Section 5.3 What is a change in demand? When quantities demanded increase or decrease at all
prices.
How is this shown using a demand curve? Causes the entire demand curve to shift to a new position on
the graph.
List the 6 non-price factors that would shift the demand curve, give a brief explanation and an example.
1. Changes in income
Ex:
2. Changes in the number of consumers
Ex:
3. Changes in consumer tastes and preferences
Ex:
4. Changes in consumer expectations
Ex:
5. Changes in the price of substitute goods
Ex:
6. Changes in the price of complementary goods
Ex:
Draw two demand curves below. Label the Y axis as “Price” and the X axis as “Quantity” (Qd)
Show one curve shifting to a demand increase and the other shifting to a demand decrease. Label each.
Section 5.4
Define quantity supplied (Qs) - the amount of a good or service that producers are
willing and able to offer for sale at a specific price.
Define supply - the amount of a good or service that producers are willing and able to offer for sale at all
prices in a given period
Explain how the two terms above are different in your own words?
What is the law of supply? an economic law stating that as the price of a good or service increases, the
quantity supplied increases, and vice versa
List and explain the two reasons economists believe that price and quantity supplied (Qs) move in the
same direction.
1. production decisions by existing producers – businesses produce more when price goes up to increase
their profits
2. market entries and exits - When the price of a good or service increases, new firms may enter a market
because they see the potential for profit
Section 5.5 What is a change in supply? When market supply at all prices increases or decreases.
List the 6 non-price factors that would shift the supply curve, give a brief explanation and an example.
1. Changes in the cost of inputs
Ex:
2. Changes in the number of producers
Ex:
3. Changes in technology
Ex:
4. Changes in producer expectations
Ex:
5. Changes in conditions due to natural disasters or international events
Ex:
6. Changes in government policy
Ex:
Draw two supply curves below. Label the Y axis as “Price” and the X axis as “Quantity” (Qs)
Show one curve shifting to a supply increase and the other shifting to a supply decrease. Label each.
```