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68 Cards in this Set
- Front
- Back
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The income of a consumer decreases and the consumer's demand for a particular good decreases. It can be concluded that the good is |
Normal |
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In competitive markets a surplus or shortage will |
cause buyer and seller reactions which will tend to eliminate the surplus or shortage |
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A curve or schedule that shows the various amounts of a product producers are willing and able to sell at each price in a series of possible prices during a specified period of time is called |
supply |
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Two goods are substitutes for each other, a decrease in the price of one will necessarily |
decrease the demand for the other |
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Two goods are substitutes for each other, an increase in the price of one will necessarily |
increase the demand for the other |
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Two goods are compliments for each other, an increase in the price of one will necessarily |
decrease the demand for the other |
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Two goods are compliments for each other, an decrease in the price of one will necessarily |
increase the demand for the other |
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The law of supply states that, other things being equal, as price decreases |
quantity supplied decreases |
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The law of supply states that, other things being equal, as price increases |
quantity supplied increases |
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An increase in the supply of a product would most likely be caused by |
* an increase in consumer incomes * a decrease in resource costs for production * a decrease in the price for a complementary good |
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An decrease in the supply of a product would most likely be caused by |
an increase in business taxes |
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The demand curves moves from D1 to D3 on pg. 53, there has been |
a decrease in demand |
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The demand curves moves from D1 to D2 on pg. 53, there has been |
an increase in demand |
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If the quantity supplied of a product is greater than the quantity demanded then |
there is a surplus of the product |
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If the price of a product is below the equilibrium price, the result will be |
A shortage of the good |
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A decrease in supply and a decrease in demand will |
affect price in an indeterminate way and decrease the quantity exchanged |
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A decrease in supply and a increase in demand will |
increase price and affect the quantity exchanged in an indeterminate way |
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A increase in supply and a decrease in demand will |
lower price and affect the quantity exchanged in an indeterminate way |
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A increase in supply and a increase in demand will |
affect price in an indeterminate way and increase the quantity exchanged |
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Which product is most likely to be the most price inelastic |
bread |
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Which product is most likely to be the most price elastic |
restaurant meals |
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If the demand curve is horizontal it is |
a perfectly elastic demand curve |
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If a 4% fall in the price of a product causes the quantity demanded of the product to increase by 4% demand is |
Unit Elastic (=1) |
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The income of a consumer decreases and the consumer's demand for a particular good increases, it can be concluded that the good is |
inferior |
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Which will decrease the demand for a product |
A decrease in the number of buyers |
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A curve or schedule that shows the various amounts of a product consumers are willing and able to purchase at each price in a series of possible prices during a specified period of time is called |
demand |
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The law of demand states that, other things being equal, as price increases |
quantity demand decreases |
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The law of demand states that, other things being equal, as price decreases |
quantity demand increases |
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which of the following are the determinants of the price elasticity of demand |
time substitutability proportion of income luxuries versus necessities |
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The total number of dollars received by a firm from a sale of a particular product in a particular period is called |
total revenue |
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A product demand for which quantity demanded can be any amount at a particular price is called |
perfectly elastic demand (horizontal) |
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A product demand for which quantity demanded is fixed at any particular price is called |
perfectly inelastic demand (vertical) |
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A measure of the responsiveness of buyers to a change in the price of a product is called |
price elasticity of demand |
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Product demanded for which price changes cause relatively larger changes in quantity demanded is called |
elastic demand (>1.0) |
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Product demanded for which price changes cause relatively smaller changes in quantity demanded is called |
inelastic demand (<1.0) |
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A measure of responsiveness of sellers to a change in the price of a product is called |
Price elasticity of supply |
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Curve moves from s1 to s2 on the graph figure 3.5 , which means there has been |
an increase in supply |
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Curve moves from s1 to s3 on the graph figure 3.5 , which means there has been |
a decrease in supply |
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The law stated by Alfred marshall in 1890 that stated when the price of a product decreases, people tend to buy more of it is called |
the law of demand |
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The amount of a product that a household would buy in a given period if it could buy all it wanted at the current market price is called |
quantity demanded |
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Price ceiling |
a legally established maximum (below-equilibrium) price for a product. sets the maximum legal price a seller may charge for a product or service |
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price floor |
a legally established minimum (above equilibrium) price for a product. a minimum price fixed by the government |
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total revenue test |
a test that determines elasticity by examining what happens to total revenue when price changes |
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Short Run |
A period in which producers are able to change the quantities of some but not all the resources they employ. A period of time too short to change plant capacity but long enough to use the fixed-size plant more or less intensively |
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Long Run |
A period long enough to enable producers of a product to change all the resources they employ. time period long enough for firms to adjust their plant sizes and for new firms to enter (or for existing firms to leave) the industry. |
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income elasticity of demand |
measure the degree to which the quantity of a product demanded responds, positively or negatively, to a change in consumers income. Normal (positive) or Inferior Goods (negative) |
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Cross elasticity of demand |
A measure of the responsiveness of the quantity demanded of one product to a change in the price of another product Substitute Goods (positive) Complementary Goods (negative) Independent Goods (0) |
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The law of demand has a certain relationship between price and quantity demanded. This relationship is said to be |
Negative or Inverse |
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The law of supply has a certain relationship between price and quantity demanded. This relationship is said to be |
positive or direct |
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A change in the price of a good or service leads to a |
change in quantity demanded movement along the demand curve |
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Whereas a change in the incomes, preferences of prices of other goods and services leads to |
a change in demand a shift in the demand curve |
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The movement from one point to another on a demand curve is called a |
change in the quantity demanded change in price demanded |
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Determinants of demand |
Taste or preferences Income Number of buyers The prices of related goods Expected prices |
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Determinants of supply |
Resource Prices Technology Taxes and Subsidies Prices of other goods Expected prices number of sellers |
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The amount of a product that a producer would sell in a given period if it could sell all it wanted at the current market price is called |
quantity supplied |
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The price in a competitive market at the point where the quantity demanded and the quantity supplied of a product are equal (or intersect) is called |
Equilibrium price |
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Underallocations of resources that occur when private demand curves understate consumers' full willingness to pay for a good or service are called |
demand-side market failure |
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The production of the particular mix of goods and services most highly valued by society under the assumption of least cost production is referred to as |
allocative efficiency |
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Four Fundamental Questions |
What goods and services will be produced How will the goods and services be produced Who will get the goods and services How will the system promote progress |
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medium of exchange |
Any items sellers generally accept and buyers generally use to pay for goods and services |
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The idea that externality problems can be resolved through private negotiations by the affected parties when property rights are clearly established is |
the coase theorem |
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Which will increase the demand for a product |
An increase in the price of a substitute good A favorable change in consumers taste A decrease in the price of a complementary good An increase in the number of buyers |
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An increase in the supply of a product would most likely be caused by |
An increase in consumers income A decrease in resource costs for production A decrease in the price for a complementary good A decrease in business taxes |
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If a 1% fall in the price of a product causes the quantity demanded of the product to increase by 2%, demand is |
elastic |
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Compared to the upper-left corner, the lower right corner portion of most demand curves tends to be |
more inelastic |
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Compared to the lower-right corner, the upper left corner portion of most demand curves tends to be |
more elastic |
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In 1890, this economist coined the word "demand" |
Alfred Marshall |
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Circular Flow Chart |
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