When the whole curve moves

Civics & Economics · Economics · ages 14-16

Name ______________________ Date ____________

A buyer can choose either rice or pasta for a meal, using one in place of the other. For this buyer, they are substitutes.
Circle one: True False
Which change shifts demand, rather than moving along the demand curve?
- A decrease in the good's own price
- A change in buyers' tastes
- An increase in the good's own price
At $3 per notebook, producers offer 6 notebooks before using a cost-saving machine and 9 after. Supply also increases at other prices. What happened to supply?
- Supply shifted right
- Supply shifted left
- Quantity moved along unchanged supply
Coffee demand is unchanged. Quantities are bags per day. After frost, what is the new equilibrium?
Price Demand Old supply New supply
$2 12 8 4
$3 10 10 6
$4 8 12 8
- $4 and 8 bags per day
- $3 and 10 bags per day
- $2 and 12 bags per day
Frost destroys half a coffee crop. Demand factors are unchanged. Which curve shifts, and why?
- Demand shifts left because a smaller crop means fewer purchases.
- Supply shifts left because fewer beans are available.
- Supply shifts right because a higher price encourages growers to sell more.
When analysing a demand or supply change, what does 'other things equal' mean?
- Price and quantity stay fixed while other factors change.
- Other relevant factors stay fixed during one change.
- Real markets have only one changing factor at any time.
A cost-saving machine shifts supply right. Kim then says the lower equilibrium price shifts demand right too. With other demand factors unchanged, what should Kim change?
- Keep both shifts: lower prices change buyers' tastes.
- Shift demand left: lower prices mean fewer purchases.
- Keep demand fixed: price moves along its curve.
Buyers' incomes rise and coffee is a normal good. Supply stays unchanged and slopes upward. In the standard model, what happens to equilibrium?
- Equilibrium price and quantity both rise
- Equilibrium price and quantity both fall
- Equilibrium price stays fixed as quantity rises

Price	Demand	Old supply	New supply
$2	12	8	4
$3	10	10	6
$4	8	12	8

Answer key

For grown-ups. Fold this page away before handing over the rest.

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True · The statement is true. Substitutes can replace one another. This buyer can use rice in place of pasta or pasta in place of rice.
A change in buyers' tastes · Changed tastes can change how much buyers want at each price. Changes in the good's own price move along the existing demand curve.
Supply shifted right · Producers offer more at the same price, and supply increases at other prices too. This is a right shift of supply, not movement caused by a notebook price change.
$4 and 8 bags per day · Use the new supply column. At $4, quantity demanded and new quantity supplied both equal 8 bags per day. The old equilibrium was $3 and 10 bags per day.
Supply shifts left because fewer beans are available. · Frost leaves fewer beans to offer at each price, shifting supply left. Fewer purchases do not by themselves show a demand shift. A higher price causes movement along supply, not a right shift.
Other relevant factors stay fixed during one change. · Hold other relevant factors constant to isolate one change. Price and quantity can still adjust, and real markets can experience several changes together.
Keep demand fixed: price moves along its curve. · The machine shifts supply right. The resulting lower price increases quantity demanded along the unchanged demand curve; it does not cause a second shift.
Equilibrium price and quantity both rise · Higher income raises demand for a normal good. The right-shifted demand curve meets unchanged upward-sloping supply at a higher price and quantity.