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37 Cards in this Set

  • Front
  • Back
MOdern economics involves
supply,demand,equilibrium
market
group of buyers and sellers for a particular good/service
Competitive market includes:
many buyers and sellers,not controlled by one person, narrow range of prices
perfect competition
Products are the same,numerous buyers and sellers,Buyers and sellers are price takers
oligopoly
few sellers, not always agressive competition
monopolisitc competition
many sellers,slightly differed prodcuts, each seller sets their own price
Law of demand
their is an inverse relationship betwenn price and quantity demanded
Determinants of demand
market price, income, prices of related goods, tastes expectations
Demand curve
Downward sloping
Market demand
All individuals demands for good or service
quanitity demanded changed by:
change in price
demand changed by
determinant other than price
As income increases a demand for a normal good will:
increase
AS income increases the demand for an inferior goods:
Decreases
substitutes
fall in the price of one good causes the change in demand for another
fall in price of one good increases the demand for another
complements
determinants of supply
marketprice, input prices, tech, expectations, number of producers
excess supply creates
surplus
excess demand creates
shortage
supply reduces move to the
Left
demand increases move to the
right
elasticity
how much buyers and sleers respond to changes in market conditions
price elasticity of demand
percentage change in quanitity demanded given a percentage change in price
determinants of price elasticity of demand
nessecities vs luxuries, availbility of substitutes, definition of the market, time
demand is more elastic:
the good is a luxury, the longer the time period, larger number of substitutes, the more narrowly defined the market is
equation for pr. elasticity of demand
quant. demanded divided by the percentage in price change
inelastic demand..
quant. demanded does not respond strongly to price changes, price elasc. is less than 1
elastic demand...
responds strongly.. elas is more then 1
perfectly inelastic
quant. demanded does not respond to price changes (vertically graphed)
perfectly elastic
quant. demanded changes infinitely with any change in price (horizontally graphed)E=infinity
unit elastic
quant demanded changes byt the percentage change in price (curved graph) E=1
total revenue equation
Price X Quant.
income elas. of demand
Percentage change in quant. demanded/ percentage change in income
income elasticity types of goods
normal, inferior
Income inelastic
goods consumers regard as necessities
income elastic
goods that are luxuries
price elasticity of supply
same as demand but with supply