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24 Cards in this Set
- Front
- Back
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Market
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A group of buyers and sellers of a particular good or service
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Buyers...
Sellers... |
determine demand
determine supply |
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Competitive Market
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a market in which there are many buyers and many sellers so that each has a negligible impact on the market price
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Quantity demanded
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the amount of a good that buyers are willing and able to purchase
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Law of Demand
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Price of good up=Demand down
Price of good down=Demand up |
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Demand Schedule
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a table that shows the relationship between the price of a good and the quantity demanded
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Demand Curve
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a graph of the relationship between the price of a good and the quantity demanded
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Market Demand
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the sum of all the individual demands for a particular good or service
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Normal good
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income up=higher demand for good
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Inferior good
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income up=lower demand for good
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What could cause a shift in the demand curve?
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Factors found in the DEMAND FUNCTION:
Income Prices of Related Goods (sub/comp) Tastes Expectations Number of Buyers |
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Substitutes
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increase in price of one good=increase in demand for the other
Ketchup 1/Ketchup 2 |
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Complements
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increase in price of one good=decrease in demand for the other
decrease in price of one=increase in demand of other (both) hot dogs/hot dog buns |
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Giffen Good
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Price up=demand up
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Quantity Supplied
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the amount of a good that sellers are willing and able to sell
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Law of Supply
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price of good up=supply up
price of good down=supply down |
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Supply Schedule
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table that shows the relationship between the price of a good and the quantity supplied
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Supply curve
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graph of the relationship between the price of a good and the quantity supplied
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What could cause a shift in the supply curve?
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Factors of the SUPPLY FUNCTION:
Input prices Technology Expectations Number of Sellers |
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When does a curve shift?
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Only when there is a change in a relevant variable that is not named on either axis.
PRICE of the good only makes you move along the curve, it will not shift the curve itself. Price of input, or price of related good, could make the curve shift though. |
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Equilibrium
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A situation in which the market price has reached the level at which quantity supplied equals quantity demanded
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Surplus
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when quantity supplied is greater than quantity demanded
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Shortage
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when quantity supplied is less than quantity demanded
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Law of Supply and Demand
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the claim that the price of any good adjusts to bring the quantity supplied and the quantity demanded for that good into balance
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