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14 Cards in this Set

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  • Back
define supply
controlld by producer. it is that which is available for sale
When increases in supply occur
1. new discovery
2. increased production or efficiency
3. Transfer use of existing product
4. New Company enter market
When decreases in the supply occur
1. recall withdraw
2. destruction of merchandise
3. Product withdrawn by manufacturer
4. firm exits market
Supply curve behavior
increases to the right
decreases to the left
define demand
controlled by consumer. It is desire coupled with the ability to buy.
when demand increases
1. ads, promotion
2. new use for established product
3. improved product, new appeal
4. substitute use
5. taxes go down
when demand decreases
1. bad press
2. end of a fad
3. duplicate product starts to compete
4. other is better bargain
5. taxes go up
demand curve behavior
increases to the right, decreases to the left
define elasticity
change in price causes shift in demand
define inelasticity
price change causes little or no shift in demand
equilibrium
the quantity consumers are willing and able to buy equals the quantity producers are willing and able to sell
surplus
at a given price, the amount by which quantity supplied exceeds quantity demanded; a surplus usually forces down the price
shortage
at agiven price, the amount by which the quantity demanded exceeds quantity supplied; a shortage usually forces the price up
transaction costs
the cost of time and information needed to carry out market exchange