Chapter 3 Flashcards

1
Q

Quantity demanded

A

The price of a good a consumer is willing to get

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2
Q

Demand schedule

A

A table showing the relationship between the price and demand of a good

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3
Q

Demand curve

A

A curve showing the relationship between the price and demand of a good

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4
Q

Market demand

A

The demand of all consumers

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5
Q

Law of demand

A

Price increase, quantity demand decrease; price decrease, quantity demand increase

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6
Q

Normal

A

Demand increase, income increase

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7
Q

Inferior

A

Demand increase, income decrease

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8
Q

Substitue

A

goods that are used for the same purpose

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9
Q

Complements

A

Goods that can be used together

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10
Q

Income effect

A

Changing the price effects the consumers purchasing power

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11
Q

Substitution effect

A

Change in price effects quantity demanded by making it more or less expensive than substitute goods

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12
Q

Ceteris paribus

A

“All else equal” holding everything constant

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13
Q

5 important economic variables that shifts demands

A

1) Income
2) Taste
3) Price of related goods
4) Expected future prices
5) Population

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14
Q

Quantity supplied

A

amount of a good or service that a firm can supply

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15
Q

Supply schedule

A

a table showing the relationship between the price and the quantity supplied

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16
Q

Supply curve

A

a curve showing the relationship between the price and the quantity supplied

17
Q

Law of supply

A

Price increase, quantity supplied increase; price decrease, quantity supplied decrease

18
Q

5 important economic variables that shift supply

A

1) price of outputs
2) technological change
3) price of related goods in production
4) expected future prices
5) number of firms in the market

19
Q

Technological change

A

A firm can produce output with given quantity and that can be negative or positive

20
Q

Market equilibrium

A

When quantity supplied and quantity demand meet

21
Q

Competitive market equilibrium

A

In a market there are many buyers and sellers

22
Q

Surplus

A

When quantity supplied is greater than quantity demanded - price above the equilibrium

23
Q

Shortage

A

When quantity demanded is greater than quantity supplied - price below the equilibrium