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16 Cards in this Set
- Front
- Back
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What does the demand curve represent?
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Pg 47
the downward slope reflects the law of demand |
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What is the Law of Demand?
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pg 47
There is a negative or inverse relationship between price and quantity demand. economist call this inverse relationship. |
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What does the term "diminishing marginal utility" refer to?
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Pg 47
it refers to the satisfactin that a customer gets from buying multiple units and thier satisfaction dimishing with each additional purchase unless a price is reduced. after you buy your 2nd or 3rd big mac your not as satisfied. |
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Explain the difference between the income effect and the substitution effect.
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Pg 49
Substitution effect-substituting a different brand for the same item. |
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Identify the Determinants of Demand.
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Pg 50
change in buyer taste change in number of buyers change in income change in the prices of related goods change in consumer expectations |
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What is the difference between a "change in demand" and a "change in quantity demanded"?
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Pg 51
change in demand is a shift of the demand curve either left (decrease in demand) or right(increase in demand) change of quantity demand- means an increase or decrease in price. simply stated with a decrease the buyer will purchase more product for the same amount. |
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What does the supply curve represent?
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Pg 51
Decrease to the left increase to the right |
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What is the Law of Supply?
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Pg 51
as price rises, the quantity supplied rises; as price falls, the quantity supplied falls |
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Identify the Determinants of Supply.
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Pg 52
1. resource prices= cheap labor 2.technology= 3.taxes and subsidies 4.price of other goods 5.producer expectations 6.the number of sellers in the market |
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What is the difference between a "change in supply" and a "change in the quantity supplied"?
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Pg 53-54
Change in supply is a change in one or more of the determinants of supply causes a change in supply. a change in quantity supplied- is caused by a change in the pproduct price and is shown by a movement from one point to another |
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What is the equilibrium price?
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Pg 54
or market clearing price is the price where the intentions of buyers and sellers match. |
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What is the difference between a surplus and a shortage? Where do they appear relative to the equilibrium price on a graph?
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Pg 55-56
surplus in an excess of supply Shortage (or excess demand) demand exceeds supply. surplus is above, shortage is below |
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What is the difference between productive efficiency and allocative efficiency?
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Pg 56
productive efficiency-the production of any particular good in the least costly way allocative efficiency-particular mix of good and services most highly valued by society |
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What is a price ceiling?
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Pg 59
sets the maximum legal price a seller may charge for a product or service. |
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What is a black market?
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Pg 60
selling a product that is high in demand for a higher price than the government allows. |
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What is a price floor?
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Pg 61
is a minimum price fixed by the government. |
