Professional Documents
Culture Documents
Market Equilibrium
P2
Demand
Q1 Q2 Q
Smoking (*)
According to Finance Minister Sheu Yu-jer (
), drawing from statistics compiled by the
ministry, the smoking rate for people with a
monthly income between NT$20,000 to
NT$40,000 is more than 20 percent, while the
rate is a higher 34 percent for those who earn
more than NT$100,000 per month.
Based on the information, smoking is a(n)
1. normal good.
2. inferior good.
3. Cannot determine from the info.
Belief about future price
Alternatively, in response
to a upcoming price drop,
the current demand for
CPCS gasoline will
1. increase
2. decrease
3. remain unchanged
4. move up along the
demand curve
Prices of related products
Prices of related
products
P Demand
Substitutes (Coke vs
Pepsi; rice vs wheat, etc) P1
Complements (meat vs
BBQ sauce; peanut
butter vs jelly, etc) P2
Demand
Q1 Q2 Q
Prices of related products
If price of its substitute,
mango ice, has dropped, P Demand
the demand for Adzuki
bean ice will (are you P1
more willing or less
willing to buy?)
1. Shift to its right P2
(increase)
Demand
2. Shift to its left
(decrease)
3. Remain unchanged Q1 Q2 Q
Attention! shopper
As on-line shopping becomes easier, visitors to
physical (bricks-and-mortar) retail stores are
1. increasing.
2. decreasing.
3. moving up along the original demand curve.
4. moving down along the original demand curve.
Supply
Supply describes what
P
sellers are willing and Supply (Curve)
able to do at different
prices P1
3. Remain unchanged
Q1 Q2 Q
Minimum wage (*)
After news reporting
lower-than-required
wage rate paid to part-
time working students
in Pingtung, the number
of shops in the
neighborhood will
1. Drop
2. Expand
3. Remain unchanged
technology
If it costs more to raise
P
chicken laying brown Supply (Curve)
eggs than those laying
white ones, the supply P1
of brown eggs will be
____ that of white ones.
P2
1. bigger than
2. smaller than
3. the same as
Q1 Q2 Q
Future expectation
Foreseeing higher market price for vegetables
after typhoon, the supply of vegetables (that
can be preserved without much cost) before
typhoon (compared to regular days) will
1. move to its right.
2. move to its left.
3. move up along the original supply curve.
4. remain unchanged.
Reality check?
Taiwan to hike cigarette
tax by NT$20 per pack.
http://www.taipeitimes.com/News/editorials/arc
hives/2015/08/15/2003625379
Conclusion
Price will eliminate imbalances between
supply and demand if its flexible.
Determinants of demand (supply) refers to
factors other than its own price causing
impact to the demand (supply).
From the impacts in demand/supply, we can
expect its consequence in market; from the
transition in market, we can sort out the
possible main causes for its change.