Question

Relationship between Price, Quantity Demanded and Quantity Supplied

The concept is that there is an inverse relationship between price of a good and the quantity demanded and a direct relationship between the price of a good and the quantity supplied. For example, an increase in the price will cause a decrease in the quantity demanded and an increase in the quantity supplied.

Choose a good or service and speculate how the quantity demanded or supplied will change with a given change in price. (Pick any good or service…. plumbers, teachers, gasoline, butter, eggs, etc.)

Impact of a change in the Demand or Supply for a good or service

Now suppose we are talking about the actual underlying Demand for a good or service at any price. For instance, suppose bananas become very popular because of a perceived or actual health benefit. In this instance, the demand actually “shifts” and people demand more bananas at all prices.

Now choose a good or service and speculate what might change the demand or supply associated with that good and how the price of that good or service will change (choose only one change at a time). (Pick any good or service…. plumbers, teachers, gasoline, butter, eggs, etc.)

Answer 1