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25 Cards in this Set
- Front
- Back
- 3rd side (hint)
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demand
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willingness and ability to purchase at different prices during a specific time period
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law of demand
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price goes up then quantity demand of good falls
price and quantity inversely related |
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quantity demand
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number of units of a good that individuals are willing and able to buy at a given price during some time.
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Demand curve
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Represents the law of demand and shows quantity demanded at each price
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Substitution effect
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As the price of a good rises people substitute other lower priced good in its place
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steak price increase so buy chicken
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Law of the diminishing marginal utility
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The more you consume the less utility you get from each successive unit
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eating cookies
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Why does demand curve slope downward
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Substitution effect and the law of diminishing marginal utility
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Market demand curve
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Some of the man for all individuals in the market
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What changes a movement on the demand curve
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Change in price
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Demand shifts to right because
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People will buy greater quantity at every price and increase in demand
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Demand curve shifts to left
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People will buy lower quality at every price decreases in demand
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What causes a change in demand
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change in income
change in preference change in price of related goods change in number of buyers expectations of future price |
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change in income
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causes change in demand
income increase or decrease |
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normal good
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income increase so a person does not buy the good
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Ramen noodles
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change in preference
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likes/dislikes fads styles
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substitute goods
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two goods that satisfy similar needs or desires
as one price rises then demand for other rises |
Coke and pepsi
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complementary.goods
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two goods consumed together
price of one rises then demand for other falls |
peanut butter and jelly
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change in number of buyers
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more demand from more buyers
could be from birthrate immigration regional moves and demographic changes |
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expectations of future price
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As consumers expect price to decline in the future then it will reduce demand now. if consumers expect price to increase in the future then it will increase demand now
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Supply
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Willingness and ability to produce and sell a good at different prices during a specific time
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Law of supply
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As the price of a good rises the quantity supplied of a good rises. Price and quantity are directly related
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When does the law of supply not apply
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There is no time to produce a good and goods cannot be produced over any. Of time
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Mona lisa
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Law of increasing opportunity cost
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When more of a good is produced the cost of production will rise
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what causes change in supply
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prices of resources
change in technology number of sellers expectations of future price taxes and subsidies government restrictions |
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equilibrium
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price which quantity supplied equals quality demanded
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