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31 Cards in this Set
- Front
- Back
- 3rd side (hint)
Schedule/curve illustrating various amounts of a good buyers are willing & able to purchase at each of a series of possible prices during a specified period of time |
Demand |
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Inverse (negative) relationship between price & quantity demanded; price rise, demand falls and vice versa |
Law of Demand |
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Factors other than the price of the product being considered affect the amount purchased |
Other-things-equal |
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Lower price increases the purchasing power of a buyer's money income, enabling the buyer to purchase more of the product than before |
Income effect |
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At lower prices buyers have the incentive to substitute a less expensive product for other products relatively more expensive |
Substitution Effect |
product whose price has fallen is now a better deal relative to other products |
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Curve illustrating the demand for a product by showing how each possible price is associated with a specific quantity demanded |
Demand Curve |
downward slope; people buy more of a product as it's price falls |
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Movement along a demand curve; more or less quantity demanded due to only a change in price |
Change in quantity demanded |
more |
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Right or left shift of a demand curve due to anything else (e.g. consumers' taste, price of related goods, consumers' income, population) |
Change in Demand |
more or less demanded |
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Rightward shift if demand curve |
Increase in demand |
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Movement along the supply curve; more or less quantity supplied due to change in price only |
Change in quantity supplied |
more |
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Right or left shift of supply curve due to factors other than price (e.g. resource prices, taxes, technology, # of sellers) |
Change in supply |
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Factors influencing the quantity of a product supplied (e.g. # of sellers, resource prices, producer expectations, taxes, technology) |
Determinants of Supply |
"supply shifters" |
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Leftward shift of supply curve due to rise in production costs |
Decrease in supply |
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Rightward shift of supply curve due to fall in production costs |
Increase in supply |
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Goods for which income and demand are indirectly related |
Inferior goods |
What would you buy more of if your income fell? Buy less of if your income rose? |
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Quantity at which the intentions of buyers & sellers match; quantity demanded & quantity supplied are equal |
Equilibrium Quantity (Eq'm Q) |
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Excess supply; prices > Eq'm P result in this: |
Surplus |
Price will fall as firms reduce price to get rid of excess supply |
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Excess demand; prices < Eq'm P result in this: |
Shortage |
Price will rise as consumers bid up the price to aquire scarce quantities |
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Production of any particular good in the least costly way |
Production Efficiency |
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Leftward shift of demand curve |
Decrease in demand |
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The output of a product at which it's marginal cost & price or marginal benefit are equal, and sum of consumer surplus & producer surplus is maximized |
Allocative Efficiency |
particular mix of goods and services most highly valued by society |
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Sets the max legal price a seller may charge for a product or service |
Price Ceiling |
price at or below this point is legal & price above this point is not |
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A minimum price fixed by the government |
Price Floor |
price at or above this point is legal and price below this point is not |
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Factors influencing the amount of any product purchased (e.g. consumers' taste, # of buyers, income, prices of related goods & consumer expectations) |
Determinants of demand |
"demand shifters" |
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A good that can be used in place of another good |
Substitute good |
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A good that is used together with another good |
Complementary good |
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Goods whose demand varies directly with income; "superior goods" |
Normal goods |
What would you buy more of if your income rose? Buy less of if your income fell? |
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Goods for which income and demand are indirectly relato |
Inferior goods |
What would you buy more of if your income fell? Buy less of if your income rose? |
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Schedule/curve showing various amounts of a product producers are willing & able to make available for sale at each series of possible prices |
Supply |
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Principle that an increase in the price of a product will increase the quantity of it supplied and vice versa; this is not a change in supply |
Law of Supply |
Price & quantity directly related |
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Curve illustrating how each possible price of a product is associated with a specific quantity supplied |
Supply curve |
curve graphs as an upward slope; price "P" vertical axis & quantity "Q" horizontal axis |