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22 Cards in this Set
- Front
- Back
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market and prices (4) |
market competitive market - lots buyers/sellers so no 1 infl P money P relative P - money P : money P of next best ALT (opty) |
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u demand if u |
1. want 2. afford 3. plan to buy |
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law of demand |
high P = low Qd bc: substitution effect - when opty cost inc, ppl seek subs, Qd dec income effect - p (afford) inc, qd dec |
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change in D |
infl other than P |
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change in Qd |
P change |
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6 factors that change D |
1. P of related goods (D inc when sub inc / comp dec) 2. expected future P (exp P inc = current D inc) 3. income (normal n inf goods) 4. exp future income n credit (current D inc) 5. pop (inc = D inc) 6. preferences (ppl w same Y can D diff things) |
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Qd vs D graph |
Qd moves along D curve D shifts on graph |
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if a firm supplies a GS, then it (3) |
1. has resources n tech 2. profits 3. plan to sell |
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law of supply |
P inc = Qs inc bc Q inc = MC inc |
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change in S vs Qs |
S changes when infl by other than P Qs changes when infl by P |
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5 factors infl S |
1. P of factors of production (inc = min P WTA inc = dec S) 2. P of related G produced (P of sub dec = P of G inc, comp sames) 3. exp future P (inc = S now dec) 4. # suppliers (inc=inc shift) 5. tech (inc=lower cost if prod=inc S) 6. state of nature |
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S vs Qs curve |
Qs move along S curve S shift on graph |
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market equilibrium |
when P = plans of buyers n seller |
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eq P |
P at which Qd=Qs |
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eq Q |
Q bough n sold at same P |
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surplus |
Qs > Qd = surplus Qd > Qs = shortage Qs = Qd = equilibrium |
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P adjustments |
surplus = force P down shortage = force P up eq = constant |
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inc in S or D = shift rightward dec = shift leftward |
compare point movement |
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inc both D and S |
eq Q up eq P uncertain: D up = up , S up = down |
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dec both D and S |
Q down eq P uncertain D down = down , S down = up |
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D down and S up |
eq P down eq Q uncertain D down = down, S up = up |
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D up = eq P and eq Q up
D down = eq P and eq Q down |
S up = eq P down, eq Q upS down = eq P up, and eq Q down |
