1.4-1.6 Flashcards
woo (19 cards)
que es demand
the different quantities of goods that consumers are willing and ABLE to buy (if you are able to purchase diapers, but you are not willing to buy them, there is still no demand)
Law of Demand
There is an inverse relationship between price and quantity demanded
que es quantity demanded
the amount of a good or service that consumers are willing to buy at A GIVEN PRICE and TIME
diff between quantity demanded and regular demand
“Quantity demanded” refers to the specific amount of a good a consumer is willing to buy at a particular price, while “regular demand” or simply “demand” represents the overall relationship between price and the quantity consumers are willing to buy across different price points - a shift in demand = whole graph, shift in quantity demand = single pt :3
Why does the law of demand occur - 3 reasons
- substitution effect - if the price goes up for a product, a consumer buys less of that product and more of another substitute product + vice versa
- income effect If a price goes down for a product, the purchasing power increases for consumers, allowing them to purchase more / they are able to purchase more
- law of diminishing marginal returns/utility - utility = satisfaction, we buy goods cuz we get utility from them. As you consume anything, the additional satisfaction that you receive will eventually start to decrease/ The more you buy of any good, the less satisfaction you git per unit consumed. Therefore for any good or service, the marginal utility of that good or service decreases as the quantity of the good increases, ceteris paribus. In other words, total utility increases more and more slowly as the quantity consumed increases. = worth less
components of a demand curve
quantity demanded on x axis, price on y axis - line will be negative to show inverse relationship.
what fun latin awesome phrase means all things stay the same and when is dropped means the curve is shifted entirely !
ceteris paribus
wat causes a shift in dEMAND (hint hint merit)
m - market size/#of consumers
e - expectations
r - related prices
i - income
t - tastes and preferences
types of related goods and their relationships
substitutes - goods used in place of another - when price for this falls, demand for other product falls.
complements - goods bought w the other. when price for this falls, demand for other good increases.
normal goods n inferior goods
when income increases
normal goods increase and inferior goods decrease (demand)
when income decreases
normal goods decrease and inferior goods increase
normal = regular
inferior = their appeal is their low price instead of quality
que es supply
the different quantities of a godo or service that sellers are willing and able to sell/produce!!! (at different prices) things related to supply will thus be seen from producers view point
que es el law of supply
there is a directive/positive relationship between price and quantity supplies. As price increases, the quantity producers make increases (we want to produce more goods). as price falls, the quantity producers make falls (why tf would we want to sell this to u).
components of supply graph
quantity on x axis, price on y. (quantity always goes on x) (its quirky)
diff between change in supply and change int he quantity supplied
a change in supply refers to a shift in the time / market, quantity supplies es el amount of a product or service that suppliers are willing and able to sell at a given price within a specific time period, es un singular point.
wat causes a shift in supply hint hint TINGE (like hinge! but its economics, so we exchange the h for a t because we are exchanging homos for transactions!)
t - technology
i - inputs
n - num of sellers
g - government actions - taxes and subsidies
e - expectations of future profit
taxes and subsidies
tax = gov takes mons
subsidies = gov gibs mons
tax = decrease :(
subsidies = increase :)
equilLIB(tard XDDD)rium
a theoretical state in which the aggregate demand and supply of a country are equal. ideal for both consumers and producers, more balanced ig.
surplus + shortage
surplus - excess in supply / quantity > demand
shortage - no supply : ( / quantity < demand
when surplus, producers lower prices as to increase demand. when shortage, producers higher prices as to lower demand. (again we r #reaching equilibrium wow)
yap abt the changes in supply and demand equilibrium with shifts and stuff sorry i just need to make this more intuitive for me
increase in supply only causes a decrease in price cuz surplus
change in demand only causes an increase in price cuz shortage
if one increases and the other decreases obviously the above applies just at a greater extent because they amplify eachother
when both increase/decrease, we can only know that the quantity moves accordingly because we dunno how much each is moving but we do know that both suppliers and consumers demand/supply more/less stuff.
