A change in the price of pizza would not shift this

Info icon This preview shows pages 21–24. Sign up to view the full content.

View Full Document Right Arrow Icon
A change in the price of pizza would not shift this supply curve; it would only move from 21
Image of page 21

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
one point to another along the same supply curve. 4. If the price of tomatoes rises, the supply curve for pizza shifts to the left because of the increased price of an input into pizza production, but there is no effect on demand. The shift to the left of the supply curve causes the equilibrium price to rise and the equilibrium quantity to decline, as Figure 3 shows. If the price of hamburgers falls, the demand curve for pizza shifts to the left because the lower price of hamburgers will lead consumers to buy more hamburgers and less pizza, but there is no effect on supply. The shift to the left of the demand curve causes the equilibrium price to fall and the equilibrium quantity to decline, as Figure 4 shows. Figure 3 Figure 4 Questions for Review 1. A competitive market is a market in which there are many buyers and many sellers of an identical product so that each has a negligible impact on the market price. Other types of markets include monopoly, in which there is only one seller, oligopoly, in which there are a few sellers that do not always compete aggressively, and monopolistically competitive markets, in which there are many sellers, each offering a slightly different product. 22
Image of page 22
2. The quantity of a good that buyers demand is determined by the price of the good, income, the prices of related goods, tastes, expectations, and the number of buyers. 3. The demand schedule is a table that shows the relationship between the price of a good and the quantity demanded. The demand curve is the downward-sloping line relating price and quantity demanded. The demand schedule and demand curve are related because the demand curve is simply a graph showing the points in the demand schedule. The demand curve slopes downward because of the law of demand—other things equal, when the price of a good rises, the quantity demanded of the good falls. People buy less of a good when its price rises, both because they cannot afford to buy as much and because they switch to purchasing other goods. 4. A change in consumers' tastes leads to a shift of the demand curve. A change in price leads to a movement along the demand curve. 5. Since Popeye buys more spinach when his income falls, spinach is an inferior good for him. Since he buys more spinach, but the price of spinach is unchanged, his demand curve for spinach shifts out as a result of the decrease in his income. 6. The quantity of a good that sellers supply is determined by the price of the good, input prices, technology, expectations, and the number of sellers. 7. A supply schedule is a table showing the relationship between the price of a good and the quantity a producer is willing and able to supply. The supply curve is the upward-sloping line relating price and quantity supplied. The supply schedule and the supply curve are related because the supply curve is simply a graph showing the points in the supply schedule.
Image of page 23

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 24
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern