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17 Cards in this Set
- Front
- Back
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Law of Demand
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Other things equal, price is inversely correlated to quantity demanded.
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Determinants of Demand
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Consumer preferences, number of buyers, consumer incomes, price of related goods, and consumer expectations.
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Normal goods
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Products whose demand correlate directly with changes in income.
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Inferior goods
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Products whose demand correlate inversely with changes in income.
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Change in demand
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A shift of the demand curve.
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Change in quantity demanded
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A movement from one point to another on a fixed demand curve.
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Law of supply
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Other things equal, price is directly correlated to quantity supplied.
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Determinants of supply
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Resource prices, technology, taxes and subsidies, prices of other goods, producer expectations, and number of sellers.
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Change in supply
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A shift of the supply curve.
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Change in quantity supplied
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A movement from one point to another on a fixed supply curve.
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Equilibrium price
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The price where quantity demanded equals quantity supplied.
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Productive efficiency
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The production of goods in the least costly way.
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Allocative efficiency
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The production of the most valued combination of goods.
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Price ceiling
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The maximum legal price a seller may charge for a product or service.
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Price floor
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The minimum legal price a seller may charge for a product or service.
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Price elasticity of demand
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The responsiveness of consumers to a price change.
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Price elasticity-demand coefficient and formula
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E sub d = change in quantity/sum of quantities/2 ÷ change in price/sum of prices/2
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