2: Demand and Supply Flashcards Preview

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Flashcards in 2: Demand and Supply Deck (21)
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1
Q

define a market

A

the group of buyers and sellers for a given good or service

2
Q

what is the demand schedule?

A

the TABLE that shows the relationship between the price of the good and the quantity demanded

3
Q

is the demand curve downward or upward?

A

downward

4
Q

what is the law of demand?

A

as price increases, demand quantity decreases

5
Q

Ceteris paribus

A

“all other things being equal”

6
Q

determinants of demand

A

Tastes and Fashion
Income
Price of complements and substitutes
Size and Nature of population

7
Q

How does a price change affect the demand?

A

No change in demand, only in the quantity demanded

8
Q

What is a normal good?

A

Quantity demanded increases as income increases

9
Q

What is an inferior good?

A

Quantity demanded increases as income decreases

10
Q

Key point of substitute goods

A

price increase in one increases demand for the other

11
Q

Key point of complement goods

A

price increase in one decreases the demand for the other

12
Q

What is quantity supplied

A

the amount of goods that sellers are willing and able to sell at every given price

13
Q

What is the supply schedule

A

the table that shows the relationship between the price of the good and the quantity supplied

14
Q

What is the supply curve?

A

the upward-sloping line relating price to quantity supplied

15
Q

What is the law of supply?

A

As price of the good increases, the quantity supplied increases

16
Q

Market supply

A

sum of all individual supplies of all the sellers for a particular good or service

17
Q

Determinants of supply

A

Costs of production
Environment
Number of suppliers
Technology

18
Q

What is the difference between a change in supply versus a change in quantity supplied?

A

Change in supply: SHIFT of the supply curve, NOT caused by price change

19
Q

Which direction does the supply curve shift as technology advances?

A

To the right, (due to increased production)

20
Q

two possible states of disequilibrium and their causative reasons

A

excess demand: shortage of goods

excess supply: surplus of goods

21
Q

How to calculate surpluses and shortages?

A

the difference between the quantity demanded and the quantity willing to be sold at a certain price