Ch. 3 Econ Flashcards
(21 cards)
What is demand
The various amounts of a product that consumers will buy at each possible price during a specific period
Microeconomics
The study of individual products
What is the law of demand
Inverse relationship
Change in quantity demanded
Response to change in price
Do not move whole demand curve just plot new point
Change in demand
TRIBE
Change whole demand curve
TRIBE
T- consumer tastes R- price of related goods I- income of buyers B- number of buyers E- consumer expectations
Substitutes
Goods that can be used in place of other goods
Inversely proportional
Complements
Goods that go hand in hand
Directly proportional
Normal goods
Brand name products
Inferior goods
Non brand name products
Supply
Amounts of a product that producers are willing to make at a specific period during a specified time period
Law of supply
Direct relationship
Change in quantity supplied
Price is only thing to change don’t draw new supply curve just plot new point
Change in supply
TRENT
Draw new supply curve
TRENT
T- technology R- price of resources E- expectations N- number of sellers T- taxes and subsidies
What does new technology do to supply
Causes an increase
What happens to supply when prices of resources goes down
Supply goes up
Equilibrium price
A price that is satisfactory to both the buyer and the seller
Surplus
Your supply is greater than your demand
Must lower prices to be in equilibrium
Shortage
Your demand is greater than your supply
Must raise your price to be in equilibrium
Price ceilings and price floors
Maximum and minimum price
Ceilings cause shortages
And floors cause surpluses
