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14 Cards in this Set

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  • Back
  • 3rd side (hint)
The Law of Demand
As price goes up
Quantity demanded goes down
As price goes down
Quantity demanded goes up
Price up Quantity down
Price down Quantity up
3 Factors that influence demand
1. Substitution Effect
2. Real Income Effect
3. Diminishing Marginal Effect
Sub
Real
Dimin.
Substitution Effect
As the price for one g/s goes up quantity demanded for all of its subs. goes up.
As the price for one g/s goes down quantity demanded for all its subs. goes down
price
Real Income Effect
As Prices rise and your incomes stays the same, quantity demanded for all g/s's goes down.
Diminishing Marginal Effect
Getting smaller, additional, satisfaction
(bites of mac. and cheese)
The Demand Curve
The graphical representation of a demand schedule
ALWAYS GOES TOP-LEFT TO BOTTOM- RIGHT
Market Demand
Sum of all individual demands in the market.
sum
Complements
Two goods that are bought and sold together
Peanut Butter and Jelly
Substitutes
Goods used in place of one another
Hamburgers or Hot dogs
Elasticity Of Demand
Measures the way consumers react to a price change.
"The How Much"
Law of Supply
As price goes up quantity supplied goes up. As price goes down quantity supplied goes down
up up
down down
Fixed Costs
Does not change according to the number of units produced
Rent, property taxes,
Variable Costs
Costs that change according to the number of units produced.
Raw materials, utility bills
Total Costs

Marginal Cost
Fixed Costs+ Variable Costs

Additional cost of producing one or more unit
+