Micro 1.2.2+4 Flashcards
What causes movement along demand curve?
Price change
What causes shifting of demand curve?
Non price determinants
Advertising
Fashions
Population size
Incomes
What is joint demand
Change in price of one affects demand for compliments
E.g low tobacco price, more demand for filters and paper
What is competing demand?
Change in price of one affects demand for substitutes
Rise in cigarette price affects demand for vapes
What is composite demand?
Change in demand of one affects supply of good for other uses
E.g fish for food and fish for Omega 3 oil
What is derived demand?
Change in demand for good affects demand for factor of production
What is utility?
The measure of satisfaction we get from purchasing or consuming good
What is paradox of value?
Diamond water paradox
What is effective demand
Willingness and ability of consumers to purchase goods at different prices.
Show amount that consumers are actually buying. Excludes latent demand
What is latent demand?
Where willingness to purchase goods may be limited by inability to afford it
What is market supply?
The amount of goods and services producers plan to sell at each given price level
What is extension and what is contraction?
Contraction is closer to left
Extension is closer to right
Things that cause a shift in market supply?
Costs of production- changes in raw material cost, improved technology, gov subsidies
Expectations of future prices, lower supply, stockpile for future
Weather, random shocks
