Question 1 page 93
• Law of Demand
▪ As price increases, the quantity of the product demanded decreases, and as price decreases, and the quantity demanded increases - an inverse relationship exists between the price and the quantity demanded. • Law of Supply
▪ As price increases, the quantity of a good or service a supplier is willing to offer will increase, and as price decreases, the quantity supplied will decrease – a direct relationship exists between price and quantity supplied. • Demand curve
▪ The downward –sloping demand curve illustrates the law of demand, showing that Zach demands fewer bagels at higher piece and more bagels at lower prices. [pic]
• Supply curve
• The upward-sloping supply curve illustrates the law of supply, showing that more is supplied at higher prices and less is supplied at lower prices [pic]
• Factors Influencing Demand
▪ Taste, fashion, and popularity.
▪ Buyers’ incomes.
▪ Buyers’ expectations concerning future income, prices, or availabilities. ▪ Prices of goods related as substitutes and compliments. ▪ The number of buyers in the market.
• Factors Influencing Supply
▪ The cost of producing an item.
▪ Expectations about future market conditions.
▪ Other items the seller does, or could supply.
▪ The number of sellers in a market.
Question 2 page 93
|Examples |Result |Graph change | Chang in equilibrium |Change in equilibrium | | | | |price |quantity | |A decrease in the number of builder in |Decrease in supply |Supply curve shift |Increase |Decrease | |housing market |...