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ECON 2000 Chapter : Econ 2000- Chapter7

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azuremammoth471
15 Mar 2019
School
LSU
Department
Economics
Course
ECON 2000
Professor
All

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Document Summary

Ceteris paribus a latin term meaning all other things constant or nothing else changes : ceteris paribus- is an assumption used to examine the effect of one influence on an outcome while holding all other influences constant. Shift facts in demand- important demand shift factors include: society"s income, the prices of other goods, tastes (preferences, expectations, taxes and subsidies to consumers. The demand for one rises as the price of the other rises (or the demand for one falls as the price of the other falls: ex. Coke and pepsi: factors causing a shift in the demand curve- complements, complements- two goods that used jointly in consumption. If two goods are complements, the demand for one rises as the price of the other falls (or the demand for one falls as the price of the other rises: ex. Peanut butter and jelly; tennis balls and tennis.

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Related Questions

Choose the correct option for the below question :

According to the law of demand, during a given period of time, the quantity of a good demanded

1. Increases as its price rises, ceteris paribus.

2. Increases as its price falls, ceteris paribus.

3. Decreases as its price falls, ceteris paribus.

4. Does not change when price changes.



The law of demand states that other things equal when the price of a good

a)rises, the quantity demanded of the good rises

b)rises, the demand falls

c)falls, the quantity demanded of the good rises

d)falls, the demand rises

a. State the law of supply.

  Quantity supplied rises as price increases, other things are constant. Quantity supplied falls as price decreases, other things are constant.
  Supply increases as price falls. Supply decreases as price rises.
  Supply increases as price increases. Supply decreases as price decreases.
  Quantity supplied rises as price falls, other things constant. Quantity supplied falls as price increases, other things are constant.



b. Why is price directly related to quantity supplied?

  As price rises, consumers substitute other goods whose price has not risen.
  As price rises, suppliers rearrange their activities to supply more of that good to take advantage of the higher price.
  As price falls, suppliers rearrange their activities to supply more of that good to take advantage of the lower price.
  As price rises, suppliers rearrange their activities to supply more of a substitute good to take advantage of the higher price.