Study your flashcards anywhere!

Download the official Cram app for free >

  • Shuffle
    Toggle On
    Toggle Off
  • Alphabetize
    Toggle On
    Toggle Off
  • Front First
    Toggle On
    Toggle Off
  • Both Sides
    Toggle On
    Toggle Off
  • Read
    Toggle On
    Toggle Off
Reading...
Front

How to study your flashcards.

Right/Left arrow keys: Navigate between flashcards.right arrow keyleft arrow key

Up/Down arrow keys: Flip the card between the front and back.down keyup key

H key: Show hint (3rd side).h key

A key: Read text to speech.a key

image

Play button

image

Play button

image

Progress

1/14

Click to flip

14 Cards in this Set

  • Front
  • Back
Define Law of Demand:
your willingness to pay to consume given the economic environment: The price & quantity demanded of a good are inversely related
FC#5: Explain the diagram below as it pertains to the law of Demand: use the points and define D.
If the price is $10 - your willing to buy 2 sandwiches. If price is $3, then buy 8 sandwhiches, etc.
D = demand curve
Define change in quantity demanded
A movement along the demand curve caused by a change in price: If price changes, then your willingness to pay to consume changes
FC#6: Explain the following graph as it pertains the changes in price and the law of demand:
PRICE CHANGE ONLY: called change in QUANTITY demand. Economy moves ALONG SAME DEMAND CURVE.
If the price decreases, then what is your willingness to buy?
increases - called increase in quantity demanded
If price increases, then what is your willingness to buy?
decreases - called decrease in quantity demanded
*CRITICAL POINT* A change in price is a change in quantity demand meaning?
price changed!
FC#7: Explain the graph below as it pertains to changesin demand Environment
1. Willingness to pay more for same quantity.
2. Due to enviro change, you are willing to buy more at same price
3. Whole new demand curve with change is enviro
*Notice word "quantity" is missing when enviroment changes
What are demand enviroments
1. preference
2. Income
3. # of buyers
4. Price of other goods you could consume
Explain normal and inferior goods as it pertains to income of the demand environment
1)normal good - income up, demand up (steak)
2)inferior good - income up demand down (bolagna)
Explain the price of other goods you can consume (substitue & complements) as it pertains to the demand of environment
1. substitute: as price of good 1 increases, quantity of good 2 consumed increases. (Pepsi & Coke)
2. As price of good 1 increases, quantity of good 2 consumed decreases (ice cream & hot fudge)
FC#8: suppose Pepsi runs a sale and the price of Pepsi goes down: explain the graph below as it pertains to substitues:
Price drops and people consume more. PRICE CHANGE. A change or increase in QUANTITY demanded.
FC#9: suppose Pepsi runs a sale and the price of Pepsi goes down: explain the graph below as it pertains to substitues:
Price of Coke didn't change, but consumers consume less Coke at same price as tehy substitute cheap Pepsi for Coke. ENVIRONMENT CHANGES. A change, decrease, in Demand.
If you expect price to increase in future, how does it effect demand today?
changes demand today: EG: did you fill up your gas tank on June 30 before the new gas tax went into effect July 1?