Question

1.How would you define a "market" in the economics sense of the word? Give an example of a market for a good or services that does not rely on a physical store or location.

2.How has technology affected the way markets are formed (think in terms of transaction costs? How might this affect prices?

3.In your own words, define the Law of Demand and the Law of Supply. Provide an example of each from your own life that illustrates these laws at work

4.How can a price ceiling imposed on a particular product create a shortage? Provide a specific example. Think about whether this price ceiling would have to be above or below the market equilibrium price.

5.List each of the factors that can shift a demand curve. Remember, we are talking about a shift of the demand curve, not a movement along the demand curve. In other words, price is not one of the factors.

6.Give a real-life example of the way each of these factors has affected the demand curve for a product (you may use different products for each of the examples).

Answer 1

This answer explains factors that can cause shifts in the demand and supply curves and how to analyze a market when both curves shift.

Step-by-step explanation:

Factors that Cause a Shift in the Demand Curve

• Changes in consumer preferences and tastes
• Changes in the price of related goods
• Changes in consumer income
• Changes in population and demographics
• Changes in consumer expectations

Factors that Cause a Shift in the Supply Curve

• Changes in production costs
• Changes in technology
• Changes in the price of inputs
• Changes in the number of suppliers
• Changes in government policies and regulations

Analyzing a Market with Shifts in Demand and Supply

When both demand and supply shift, the equilibrium price and quantity will change. To analyze this, one would need to determine the direction and magnitude of the shifts in both curves. The new equilibrium would be at the intersection of the new demand and supply curves.