Eco 201 Chapter 3

Front 1

A schedule or a curve that shows the various amounts of a product that consumers are willing and able to purchase at each of a series of possible prices during a specified period of time.

Back 1

Demand

Front 2

The inverse relationship between price and quantity demand

Back 2

Law of demand

Front 3

Successive units of a particular product yield less and less satisfaction.

Back 3

Diminishing marginal utility

Front 4

A lower price increases the purchasing power of a buyer's money income

Back 4

Income effect

Front 5

At a lower price buyers have the incentive to substitute what is now a less expensive product for other products that are now relatively more expensive.

Back 5

Substitution effect

Front 6

Factors other than price that can and do affect purchases

Back 6

Determinants of demand

Front 7

What are the 5 determinants of demand?

Back 7

1. Consumers' tastes
2. The number of buyers in the market
3. Consumers' incomes
4. The prices of related goods
5. Consumer expectations

Front 8

Products whose demand varies directly with money income; superior goods

Back 8

Normal goods

Front 9

Goods whose demand varies inversely with money income

Back 9

Inferior goods

Front 10

A good that can be used in place of another good

Back 10

Substitute good

Front 11

A good that is used together with another good

Back 11

Complementary good

Front 12

A shift of the demand curve to the right (increase) or to the left (decrease).

Back 12

Change in demand

Front 13

A movement from one point to another point, from one price-quantity combo to another

Back 13

Change in quantity-demand

Front 14

A schedule or curve showing the various amounts of a product that producers are willing and able to make available for sale at each of a series of possible prices during a specific period.

Back 14

Supply

Front 15

The direct relationship between price and quantity supplied

Back 15

Law of supply

Front 16

The factors other than price that can and do impact supply

Back 16

Determinants of supply

Front 17

What are the basic 6 determinants of supply?

Back 17

1. Resource prices
2. Technology
3. Taxes and subsidies
4. Prices of other goods
5. Producer expectations
6. The number of sellers in the market

Front 18

A shift in the supply curve to the left (increase) or the right (decrease)

Back 18

Change in supply

Front 19

Movement from one point to another, from one price-quantity supplied combo to another.

Back 19

Change in quantity supplied

Front 20

Where the intentions of buyers and sellers match.
Where the demand curve meets the supply curve

Back 20

Equilibrium price

Front 21

The quantity at which the intentions of buyers and sellers match.
Where the demand curve meets the supply curve

Back 21

Equilibrium quantity

Front 22

Created by an above-equilibrium price, quantity supplied exceeds quantity demanded

Back 22

Surplus

Front 23

Created by a below-equilibrium price, quantity supplied is less than quantity demanded

Back 23

Shortage

Front 24

The production of any particular good in the least costly way

Back 24

Productive efficiency

Front 25

The particular mix of goods and services most highly valued by society

Back 25

Allocative efficiency

Front 26

Sets the maximum legal price a seller may charge for a product or service. Can lead to a shortage.

Back 26

Price ceiling

Front 27

Sets the minimum legal price a seller may charge for a product or service. Can lead to a surplus.

Back 27

Price floor