Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
25 Cards in this Set
- Front
- Back
|
If you demand something, then you: 1... 2... 3... |
1. Want it 2. Can afford it 3. Plan to buy it |
|
|
What are “wants” in the context of demand? |
The unlimited desires or wishes that people have for goods and services. |
|
|
The quantity demanded is measured as an amount per unit of ______. |
Time |
|
|
Explain the substitution effect. |
As the opportunity cost of a good rises, the incentive to economize on its use and switch to a substitute becomes stronger. |
|
|
To make a supply curve we graph the ______ ______ on the x-axis and the ______ on the y-axis. |
Quantity supplied, price |
|
|
Substitutes in production |
Goods that can be produced by using the same resources. |
|
|
Compliments on production |
Goods that must be produced together. |
|
|
What happens to supply if prices are expected to rise in the future? |
The return from selling the good in the future increases and is higher than it is today. So supply decreases today and increases in the future. |
|
|
How is the term “technology” used in economics? |
It is used broadly to mean the way that factors of production are used to produce a good. |
|
|
What is the difference between a change in the quantity supplied versus a change in supply? |
A point on the supply curve shows the quantity supplied at a given price. A movement along the supply curve shows a change in the quantity supplied. The entire supply curve shows supply. A shift of the supply curve shows a change in supply. |
|
|
When does equilibrium occur in a market? |
When the price balances buying plans and selling plans. The quantity demanded equals the quantity supplied. |
|
|
When demand increases, the price _____ and the quantity _______. |
Rises, increases |
|
|
When demand decreases, the price ______ and the quantity _______. |
Falls, decreases |
|
|
When supply increases, the price _____ and the quantity ________. |
Falls, increases |
|
|
Describe the income effect. |
When a price rises, other things remaining the same, the price rises relative to income. This leads consumers to decrease quantities demanded of some goods and services. Normally, the good with the price increase will be the one people buy less of. |
|
|
When the supply decreases, the price _______ and the quantity ________. |
Rises, decreases |
|
|
If demand increases by more than supply increases, the price _____. If supply increases more than demand increases, the price _____. When both demand and supply increase and by the same amount, the equilibrium quantity _______. |
Rises, falls, increases |
|
|
Explain the difference between demand and quantity demanded. |
A point on the demand curve shows the quantity demanded at a given price, so a movement along the demand curve shows a change in the quantity demanded. The entire demand curve shows demand, so a shift of the demand curve shows a change in demand. |
|
|
What is a demand schedule? |
Lists the quantities demanded at at each price when all other influences on consumers’ planned purchases remain the same. |
|
|
Another way of looking at the demand curve is as a willingness-and-ability-to-pay curve, meaning it’s a measure of what? |
Marginal benefit |
|
|
What are the six main factors that bring change in demand? |
The price of related goods; expected future prices; Income; expected future income and credit; population; preferences |
|
|
If a firm supplies a good or service, the firm: 1... 2... 3... |
1. Has the resources and technology to produce it. 2. Can profit from producing it. 3. Plans to produce it and sell it. |
|
|
As the quantity produced of any good increases, the ________ _______ of producing the good increases. |
Marginal cost |
|
|
It is never worth producing a good if the price received for the good does not at least cover the ______ _______ of producing it. |
Marginal cost |
|
|
What is a supply schedule? |
The quantities supplied at each price when all other influences on producers’ planned sales remain the same. |
