THE MARKET FORCES OF SUPPLY AND DEMAND

Questions: 1,2,3,4,5,7,9

CHAPTER 4 THE MARKET FORCES OF SUPPLY AND DEMAND QUESTIONS FOR REVIEW 1. What is a competitive market? Briefly describe a type 6. Does a change in producers' technology lead to a of market that is no! perfectly competitive. movement along the supply curve or to a shift in the 2. What are the demand schedule and the demand supply curve? Does a change in price lead to a move- curve, and how are they related? Why does the ment along the supply curve or to a shift in the supply demand curve slope downward? curve? 3. Does a change in consumers' tastes lead to a 7. Define the equilibrium of a market. Describe the forces movement along the demand curve or to a shift in that move a market toward its equilibrium. the demand curve? Does a change in price lead to a 8. Beer and pizza are complements because they are movement along the demand curve or to a shift in often enjoyed together. When the price of beer rises, the demand curve? Explain your answers. what happens to the supply, demand, quantity sup- 4. Harry's income declines, and as a result, he buys more plied, quantity demanded, and price in the market for pumpkin juice. Is pumpkin juice an inferior or a nor- pizza? mal good? What happens to Harry's demand curve 9. Describe the role of prices in market economies. for pumpkin juice? 5. What are the supply schedule and the supply curve, and how are they related? Why does the supply curve slope upward