Practice: AP Micro supply and demand shifts

What causes a rightward shift in demand?

Increased consumer income, preferences, or number of buyers.

True or false: An increase in price always decreases demand.

False, because demand can be inelastic.

Difference between a shift and a movement along the curve?

A shift changes the curve's position; movement changes quantity supplied or demanded.

What happens when supply shifts left?

Equilibrium price rises, quantity decreases.

Factors that shift supply curve left?

Increased production costs, natural disasters, or regulations.

When does demand shift left?

Decrease in consumer income or changing tastes.

Fill in the blank: A _____ in technology typically shifts the supply curve right.

Advancement

What is the effect of a price ceiling?

Creates a shortage if set below equilibrium price.

True or false: All supply curves slope downward.

False, because supply curves slope upward.

What is consumer surplus?

The difference between what consumers are willing to pay and what they actually pay.

Define substitute goods.

Goods that can replace each other; increase in price of one increases demand for the other.

What effect does an increase in population have on demand?

Shifts demand curve right due to more consumers.

Which factor does NOT shift the demand curve?

Change in price of the good itself.

What indicates market equilibrium?

Where quantity supplied equals quantity demanded.

Decrease in demand leads to what market outcome?

Lower equilibrium price and quantity.

What is the effect of a subsidy on supply?

Shifts the supply curve right, decreasing prices.

True or false: Higher production costs always decrease supply.

True, because higher costs reduce profitability.

What happens to equilibrium if both supply and demand shift right?

Quantity increases, price effect depends on the magnitude of shifts.