A.P. Flashcards
(138 cards)
1
Q
What is demand?
A
Demand refers to the quantity of a product or service that consumers are willing and able to purchase at various prices.
2
Q
What does the Law of Demand state?
A
The Law of Demand states that, all else being equal, as the price of a good or service decreases, the quantity demanded increases, and vice versa.
3
Q
True or False: Demand decreases when the price of a substitute good rises.
A
True
4
Q
Fill in the blank: The relationship between price and quantity demanded is _____ in the Law of Demand.
A
inverse
5
Q
What are the main factors that can change demand?
A
The main factors that can change demand include consumer preferences, income levels, prices of related goods, expectations, and the number of buyers.
6
Q
What is market demand?
A
Market demand is the total quantity of a good or service demanded by all consumers in the market at a given price.
7
Q
Which of the following factors can lead to an increase in demand? A) Increase in consumer income B) Increase in the price of the good C) Decrease in the number of buyers
A
A) Increase in consumer income
8
Q
True or False: A shift to the right in the demand curve indicates an increase in demand.
A
True
9
Q
What happens to demand if consumer preferences shift towards a product?
A
Demand for that product increases.
10
Q
Fill in the blank: A decrease in consumer income typically leads to a decrease in demand for _____ goods.
A
normal
11
Q
What is the effect of a complementary good’s price increase on the demand for a product?
A
The demand for the product decreases.
12
Q
What does a demand curve illustrate?
A
A demand curve illustrates the relationship between the price of a good and the quantity demanded.
13
Q
True or False: Expectations about future prices can affect current demand.
A
True
14
Q
What term describes goods for which demand increases when income rises?
A
Normal goods
15
Q
What is the result of a successful advertising campaign on demand?
A
It can increase demand for the advertised product.
16
Q
What is the relationship between the number of buyers and demand?
A
An increase in the number of buyers leads to an increase in demand.
17
Q
Fill in the blank: A decrease in the price of a substitute good will _____ the demand for the original product.
A
decrease
18
Q
What happens to demand when consumer incomes fall?
A
Demand for normal goods decreases, while demand for inferior goods may increase.
19
Q
What is the difference between a change in demand and a change in quantity demanded?
A
A change in demand refers to a shift of the entire demand curve, while a change in quantity demanded refers to movement along the demand curve due to a price change.
20
Q
True or False: Demand can be perfectly inelastic.
A
True
21
Q
Fill in the blank: The demand for _____ goods decreases when consumer incomes increase.
A
inferior
22
Q
What are the characteristics of elastic demand?
A
Elastic demand occurs when a small change in price leads to a large change in quantity demanded.
23
Q
What is the effect of technological advancements on demand?
A
Technological advancements can increase demand for products that become more efficient or desirable.
24
Q
What is a Giffen good?
A
A Giffen good is a product that experiences an increase in quantity demanded as its price rises, contrary to the Law of Demand.
25
Fill in the blank: A shift in demand to the left indicates a _____ in demand.
decrease
26
What is the primary method of showing price in demand?
The primary method is through the demand curve.
27
True or False: Price elasticity of demand can affect how prices are displayed.
True
28
Fill in the blank: The ___________ method shows how quantity demanded changes with price.
graphical
29
What is one of the three methods for presenting price in demand?
Tabular method
30
Multiple choice: Which of the following is NOT a method of showing price in demand? A) Graphical B) Tabular C) Narrative D) Mathematical
C) Narrative
31
What does a demand schedule represent?
A demand schedule represents the relationship between price and quantity demanded in a tabular format.
32
True or False: The graphical method only shows price and not quantity demanded.
False
33
What is the purpose of the demand curve?
The purpose of the demand curve is to illustrate how the quantity demanded changes with different price levels.
34
Fill in the blank: The __________ method uses equations to depict the relationship between price and demand.
mathematical
35
What does a shift in the demand curve indicate?
A shift in the demand curve indicates a change in demand at all price levels.
36
Multiple choice: Which method provides a visual representation of demand? A) Tabular B) Graphical C) Narrative D) All of the above
B) Graphical
37
What is one limitation of the tabular method?
One limitation of the tabular method is that it does not provide a visual representation of the data.
38
True or False: All three methods of showing price in demand yield the same results.
True
39
What is the significance of understanding price elasticity in demand?
Understanding price elasticity in demand helps businesses set optimal prices and forecast changes in demand.
40
Fill in the blank: The ___________ method is often used for quick reference in pricing strategies.
tabular
41
What is the definition of supply in economics?
Supply refers to the quantity of a good or service that producers are willing to sell at various prices during a given time period.
42
True or False: An increase in the price of a good typically leads to a decrease in the quantity supplied.
False
43
What does the law of supply state?
The law of supply states that, all else being equal, an increase in price results in an increase in quantity supplied.
44
Fill in the blank: The _________ of supply measures how much the quantity supplied of a good responds to a change in price.
elasticity
45
Which of the following factors can affect supply? A) Technology B) Consumer preferences C) Government regulations
A) Technology, C) Government regulations
46
What is meant by 'elastic supply'?
Elastic supply refers to a situation where the quantity supplied changes significantly in response to price changes.
47
True or False: A decrease in production costs will likely lead to an increase in supply.
True
48
What are the two main types of supply elasticity?
The two main types are elastic supply and inelastic supply.
49
Short answer: Name one factor that can lead to a decrease in supply.
Increased production costs.
50
What term describes a situation where the quantity supplied is greater than the quantity demanded?
Surplus
51
True or False: Supply is only affected by the price of the product.
False
52
What is the effect of technological advancements on supply?
Technological advancements typically increase supply by making production more efficient.
53
Fill in the blank: A decrease in the number of suppliers in the market will likely cause supply to ________.
decrease
54
What does 'inelastic supply' mean?
Inelastic supply means that the quantity supplied is not very responsive to price changes.
55
Multiple choice: What happens to supply when government imposes taxes on production? A) Supply increases B) Supply decreases C) No change
B) Supply decreases
56
True or False: Weather conditions can impact agricultural supply.
True
57
What is the relationship between supply and price according to the supply curve?
The supply curve typically slopes upwards, indicating a direct relationship between supply and price.
58
Fill in the blank: The ________ effect describes the change in quantity supplied resulting from a change in price.
price
59
Short answer: What is one reason why a supplier might not increase supply despite higher prices?
Limited production capacity.
60
What is the term for the minimum price at which a good can be sold?
Price floor
61
True or False: Changes in consumer preferences do not affect supply.
True
62
What is the impact of subsidies on supply?
Subsidies generally increase supply by lowering production costs for suppliers.
63
Multiple choice: If the supply of a good is perfectly inelastic, what will happen to quantity supplied when price changes? A) It will change B) It will remain the same
B) It will remain the same
64
What is the primary reason for shifts in the supply curve?
Factors other than price, such as production costs, technology, and number of suppliers.
65
Fill in the blank: A ________ in the price of complementary goods can lead to an increase in supply.
decrease
66
Short answer: Name one external factor that can affect supply.
Natural disasters.
67
What does a leftward shift in the supply curve indicate?
A decrease in supply.
68
True or False: The supply of luxury goods is usually more elastic than the supply of basic necessities.
True
69
What is market equilibrium?
Market equilibrium is the point where the quantity of goods supplied equals the quantity of goods demanded.
70
True or False: Market equilibrium can change over time.
True
71
What happens to equilibrium price when demand increases?
The equilibrium price tends to rise.
72
Fill in the blank: The __________ is the price at which the quantity demanded and quantity supplied are equal.
equilibrium price
73
What effect does a decrease in supply have on equilibrium?
It typically raises the equilibrium price and lowers the equilibrium quantity.
74
Define 'shifts in demand'.
Shifts in demand refer to changes in consumer preferences, income levels, or prices of related goods that affect the overall demand curve.
75
What is a surplus in the market?
A surplus occurs when the quantity supplied exceeds the quantity demanded at a given price.
76
What is a shortage in the market?
A shortage occurs when the quantity demanded exceeds the quantity supplied at a given price.
77
True or False: A price ceiling can lead to a surplus.
False
78
What is the primary cause of a shift in the supply curve?
Changes in production costs, technology, or number of suppliers can cause a shift in the supply curve.
79
What is the law of demand?
The law of demand states that, all else being equal, as the price of a good decreases, the quantity demanded increases.
80
Fill in the blank: The __________ represents the relationship between price and the quantity supplied.
supply curve
81
What is the result of a price floor?
A price floor can lead to a surplus in the market.
82
What is the impact of a tax on equilibrium price?
A tax typically increases the equilibrium price for consumers and decreases the equilibrium quantity.
83
What does it mean when the market is in disequilibrium?
It means that the quantity supplied does not equal the quantity demanded, leading to either a surplus or a shortage.
84
True or False: Equilibrium can only be achieved in perfectly competitive markets.
False
85
What factors can cause a shift in the equilibrium point?
Changes in consumer preferences, income, the prices of related goods, production costs, and number of suppliers.
86
Define 'price elasticity of demand'.
Price elasticity of demand measures how much the quantity demanded of a good responds to a change in its price.
87
What happens to the equilibrium quantity when both supply and demand increase?
The equilibrium quantity will definitely increase, but the effect on equilibrium price depends on the relative magnitude of the shifts.
88
Fill in the blank: A __________ is a graphical representation of the relationship between supply and demand.
supply and demand curve
89
What is the intersection point of supply and demand curves called?
Equilibrium point.
90
True or False: Government regulations can impact market equilibrium.
True
91
What role do consumer expectations play in market equilibrium?
Consumer expectations about future prices can affect current demand, thus shifting the demand curve.
92
What is the effect of technological advancements on supply?
Technological advancements typically increase supply by making production more efficient.
93
What is the definition of market structure?
Market structure refers to the organizational characteristics of a market, including the number of firms, product differentiation, and ease of entry and exit.
94
What are the four main types of market structures?
The four main types of market structures are perfect competition, monopolistic competition, oligopoly, and monopoly.
95
True or False: In a monopoly, there are many sellers in the market.
False
96
Fill in the blank: In a perfectly competitive market, products are __________.
homogeneous
97
What is the role of government in a market economy?
The government regulates markets to ensure fairness, protect consumers, and promote competition.
98
What does 'price elasticity of demand' measure?
Price elasticity of demand measures how the quantity demanded of a good changes in response to a change in its price.
99
Multiple Choice: Which of the following is a characteristic of monopolistic competition? A) Single seller B) Many sellers C) Homogeneous products D) Price maker
B) Many sellers
100
What is a public good?
A public good is a product that is non-excludable and non-rivalrous, meaning it can be consumed by many individuals without reducing its availability to others.
101
True or False: Oligopolies can lead to collusion among firms.
True
102
What is the significance of barriers to entry in a market?
Barriers to entry determine how easily new firms can enter a market, affecting competition and market dynamics.
103
Fill in the blank: A __________ occurs when a single company dominates a market.
monopoly
104
What is the impact of government regulation on markets?
Government regulation can enhance competition, protect consumers, and prevent monopolistic practices.
105
Multiple Choice: Which market structure is characterized by a few large firms dominating the market? A) Perfect competition B) Oligopoly C) Monopoly D) Monopolistic competition
B) Oligopoly
106
What is the concept of consumer surplus?
Consumer surplus is the difference between what consumers are willing to pay for a good and what they actually pay.
107
True or False: In perfect competition, firms are price takers.
True
108
What is meant by 'market failure'?
Market failure refers to a situation where the allocation of goods and services is not efficient, often leading to a net loss in social welfare.
109
Fill in the blank: An __________ is an agreement among firms to limit competition, often leading to higher prices.
oligopoly
110
What role does the government play in correcting market failures?
The government intervenes to provide public goods, regulate monopolies, and address externalities.
111
Multiple Choice: Which of the following is an example of a negative externality? A) Pollution B) Education C) Public parks D) Vaccinations
A) Pollution
112
What is the purpose of antitrust laws?
Antitrust laws are designed to promote competition and prevent monopolistic practices.
113
True or False: Monopolistic competition results in firms producing at an efficient scale.
False
114
What is the difference between fixed costs and variable costs?
Fixed costs do not change with the level of output, while variable costs do change with the level of output.
115
Fill in the blank: The __________ curve shows the relationship between price and quantity supplied.
supply
116
What is the definition of market structure?
Market structure refers to the organizational characteristics of a market, including the number of firms, product differentiation, and ease of entry and exit.
117
What are the four main types of market structures?
The four main types of market structures are perfect competition, monopolistic competition, oligopoly, and monopoly.
118
True or False: In a monopoly, there are many sellers in the market.
False
119
Fill in the blank: In a perfectly competitive market, products are __________.
homogeneous
120
What is the role of government in a market economy?
The government regulates markets to ensure fairness, protect consumers, and promote competition.
121
What does 'price elasticity of demand' measure?
Price elasticity of demand measures how the quantity demanded of a good changes in response to a change in its price.
122
Multiple Choice: Which of the following is a characteristic of monopolistic competition? A) Single seller B) Many sellers C) Homogeneous products D) Price maker
B) Many sellers
123
What is a public good?
A public good is a product that is non-excludable and non-rivalrous, meaning it can be consumed by many individuals without reducing its availability to others.
124
True or False: Oligopolies can lead to collusion among firms.
True
125
What is the significance of barriers to entry in a market?
Barriers to entry determine how easily new firms can enter a market, affecting competition and market dynamics.
126
Fill in the blank: A __________ occurs when a single company dominates a market.
monopoly
127
What is the impact of government regulation on markets?
Government regulation can enhance competition, protect consumers, and prevent monopolistic practices.
128
Multiple Choice: Which market structure is characterized by a few large firms dominating the market? A) Perfect competition B) Oligopoly C) Monopoly D) Monopolistic competition
B) Oligopoly
129
What is the concept of consumer surplus?
Consumer surplus is the difference between what consumers are willing to pay for a good and what they actually pay.
130
True or False: In perfect competition, firms are price takers.
True
131
What is meant by 'market failure'?
Market failure refers to a situation where the allocation of goods and services is not efficient, often leading to a net loss in social welfare.
132
Fill in the blank: An __________ is an agreement among firms to limit competition, often leading to higher prices.
oligopoly
133
What role does the government play in correcting market failures?
The government intervenes to provide public goods, regulate monopolies, and address externalities.
134
Multiple Choice: Which of the following is an example of a negative externality? A) Pollution B) Education C) Public parks D) Vaccinations
A) Pollution
135
What is the purpose of antitrust laws?
Antitrust laws are designed to promote competition and prevent monopolistic practices.
136
True or False: Monopolistic competition results in firms producing at an efficient scale.
False
137
What is the difference between fixed costs and variable costs?
Fixed costs do not change with the level of output, while variable costs do change with the level of output.
138
Fill in the blank: The __________ curve shows the relationship between price and quantity supplied.
supply
