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23 Cards in this Set
- Front
- Back
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what side of the market does the demand curve represent
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it represents the consumer
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law of demand
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as price increases quantity demanded decreases (inversely related)
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why does demand slope downwards? (2 reasons)
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1) substitution effect: find something cheaper to replace it with
2) income effect: income doesn't go as far |
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market
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everyone who supplies & demands
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invisible hand
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when you pursue your own interests you're contributing to the general well-being of society
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opportunity cost of production
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total $ involved in creating the good (resources, etc)
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law of supply
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as the price increases, so does supply
you're willing to make more if you get more $ |
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equilibrium
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balance between supply and demand, consumers and producers wants are in harmony because what is demanded is able to be supplied
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how does the invisible hand lead to the free market?
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we don't need government to say our price is wrong because of everyone's incentive to support their business, and consumers incentive to find a good deal. can't make everyone happy
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what's the difference between scarcity and shortage?
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shortage has more to do with price
scarcity is not under the producer's control because it relies on resources |
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what happens when a price is above equilibrium
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surplus, you must change the price
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occurs when price is below equilibrium
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shortage, you must change the price
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prices of substitutes
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demand shifter
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price of complement
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demand shifter
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income
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demand shifter
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fads
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demand shifter
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expected future prices
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demand and supply shifter
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population
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demand shifter
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resource prices
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supply shifter
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taxes
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supply shifter
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weather
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supply shifter
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changes in technology
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supply shifter
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change in number of sellers
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supply shifter
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