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35 Cards in this Set
- Front
- Back
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who participates in markets
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consumers, business firms, government agencies, and international buyers and sellers
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what is the goal of the consumer in a market economy
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goods and services
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what kind of market do business firms supply goods and services to
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product market
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what kind of market do business firms purchase factors of production from
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land, labor, and capital
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what do individual consumers supply and what do they purchase
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exchange dollar for a good or service in the market place
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define what is meant when a buyer has a demand for a good
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the ability and willingness to buy specific quantities of a good at alternative price in a given time period.
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the slop of a demand curve
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negative slope because the two important variable price and quantity work in opposite direction
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under ceterisparibus what would cause the demand for a product to go up
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demand curve shows us how changes in market prices alter consumers behavior
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the concept of substitute
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goods that can be used to satisfy the same needs
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the concept of complements
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when a person need something rather then a substitute for something else or instead of.
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list the deferments of demand
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taste-desire for this and other goods
income-of the consumer other goods-their availability and price expectations-for I come, price, taste number of buyers |
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how is market demand calculated
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add the separate demands of the individual consumers at the price per hour
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list deferments of supply
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technology
factor cost other goods taxes and subsidies expectations number of sellers |
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what is implied by the law of supply
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larger quantities will be offered for sale at higher prices
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how is market supply calculated
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adding the supply market price by the quanities
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if a farmer is involved with two different products and they are related what is the result when there is a change of the supply of one.
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increase in demand
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what can change without shifting the demand or supply curve
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movement of price
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what does equilibrium signify
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the intersection of the demand and supply curves establishes the equilibrium price and output
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what causes a surplus
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the quantity supplied exceeds the quantity demanded
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if a theaters has many empty seats what is implied economicly
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the demand is low
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if the quantity demand of a good is greater than the quantity supplied at the current price what is the problem
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market shortage
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how should a shortage be corrected
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shift in the demand curve
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the result of a right shift I the demand curve and a left shift in the supply curve
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right shift demand increase the equilibrium prices rise and left shift supply decrease prices rise
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the result on equilibrium price from an increase in sellers of a particular product
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surplus
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give several explanation for a decrease in the price of electricity
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market power, natural monopoly, output produced,externalities
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when market mechanism operates freely what 3 things will prices determined
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land, labor,an
1. Market surplus 2. Market shortage 3. Self adjusting products |
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the result of market failure on public goods
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consumption of a public good by one person doesn't preclude consumption of the same good by another person.
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define market failure
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an imperfection in the market mechanism that prevents optimal outcomes.
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what two things answers the what question
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the mix of output society produce
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the merger producing efficiency
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what
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who receives the goods and services produced
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consumers
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define optimal output
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the most desirable combination
of output attainable with existing resources technology, and social values |
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what problems do price ceiling address
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increase the quality demand
decrease the quantity supplied create a market shortage |
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define price ceiling
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upper limit imposed on the price of a good.
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in order to be binding where should price ceilings be set
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zero
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