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20 Cards in this Set
- Front
- Back
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law of demand
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If everything is constant
As price falls demand Quantity increases And as price rises quantity demand decreases
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Income effect
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• as price goes up quantity demanded goes down |
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Five variables which affect the demand curve |
• income • price of substitution goods • tastes • Population demographics • expected future prices |
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Supply |
• in general, as prices go up producers want to sell more |
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Law of supply
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If everything is constant, higher prices equals higher quality supplied and lower prices equals lower quality supplied
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Five variables that Shift market demand |
• prices of inputs • technological change • Number of firms in the market
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Price of substitution goods |
As prices increases in one good demand for another good increases |
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Population and demographics
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As population increases demand increases
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Technological change
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• something that changes productivity |
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Expected future prices |
How prices are gonna be in the future |
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Consumer surplus |
• difference between what you're willing to pay for an item, and the actual price you pay, assuming you pay |
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Producers surplus |
The difference between what producers are willing to sell for An item and the actual price they Are willing sell the item for |
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Marginal cost
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• additional cost to a firm of producing one more unit |
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Economic surplus |
• sum of consumer surplus and producers surplus
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Dead weight loss
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Reduction in economic surplus from a lack of a competitive market
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Price ceiling |
• a legally determined maximum price that Sellers may change • cannot go above it |
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Price floor |
• air league lead in turn minimum price of Sellers may receive • cannot go below it |
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Binding
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• has actual affect |
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Tax incidence
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• is how the tax burden is divided |
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Tax burden
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• deadweight loss caused by a tax
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