Chapter 3 Flashcards
(32 cards)
Law of demand
Inverse relationship of the unit price and the quantity demanded
Change in demand price
Change in Quantity demanded = movement
Change in Non-price determinate
Change in demand = shift
Non-Price Determinants of Market Demand
Number of buyers Tastes and Preferences Income Expectation of buyers Prices of related goods
Perfect Substitute
Goods that are exactly same in functionality
Perfect Compliments
One good that is necessarily reliant on another.
Change in demand
increase in Quantity demanded at each possible price level
Law of Supply
Direct relationship between price and quantity supplied
Non-price determinants of market supply curve
Number of sellers Technology Government intervention Resource Prices Expectation of seller Prices of other goods
Increase or decrease in Supply
increase in the Quantity supplied at each possible price level
More Buyers
Increase in Demand = Rightward shift
Less Buyers
decrease in Demand = Leftward shift
Positive Information
Increase in Demand = Rightward shif
Negative Information
decrease in Demand = Leftward shift
More income
Buy more = Normal Good = Rightward shift
less Income
Buy less = Inferior Good = Leftward shift
if price will increase
demand increases
if price will decrease
demand decreases
More sellers
Increase in supply = rightward shift
Less sellers
Decrease in supply = leftward shift
Better technology
increase in supply = rightward shift
Increase in Resources Price
Quantity supplied decreases = leftward shif
Tax = Increase in resource price
decrease in quantity supplied
Subsidies = decrease in resource price
increase in quantity supplied
