Chapter 3 - Demand, supply and price Flashcards Preview

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Flashcards in Chapter 3 - Demand, supply and price Deck (49)
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1

What is quantity demanded

Total amount that consumers desire to purchase at a certain price IN SOME TIME PERIOD

2

Quantity bought differs from quantity demanded because it refers to _______

actual purchases

3

flow variable + ex

so much per unit of time (ex. income, expenditure, etc.)

4

stock variable + ex

meaning in a point in time (ex. money in bank account, etc.)

5

Qt demanded flow or stock

flow

6

Hypothesis about qt demanded and why

Price and qt demanded are negatively related. Reduction of price means desire can be satisfied more cheaply by buying more of it

7

How price changes demand curve

Doesn't change it -> only move on it

8

How variables other than price change demand curve (2 possibilities)

increase in demand (moves rightward)
decrease in demand (moves leftward)

9

4 things that can cause shift of demand curve

1) average household income
2) prices of other products
3) distribution of income or population
4) expectations about the future

10

Why average household income influences demand curve

normal good and inferior goods

11

normal good

qt demanded increases when income rises

12

inferior good

qt demanded decreases when income rises

13

Why distribution of income influences demand curve

changes for particular groups

14

Why prices of other products influence demand curve

Substitutes and complements

15

Substitutes def (in demand POV)

Good that can replace another one to satisfy a need

16

Complements def (in demand POV)

Goods that need to be consumed together

17

Why distribution of population influences demand curve

number of consumers

18

Why expectations about the future influence demand curve

push us to buy more or before a change

19

change in demand vs in qt demanded

in demand = curve shift
in qt demanded = mvmt along the curve or along a new curve

20

qt supplied def

amount of product firms desire to sell IN SOME TIME PERIOD

21

qt supplied vs actually sold

supplied = firm desires to sell
actually sold = sold

22

qt supplied flow or stock

flow

23

Hypothesis about relationship between price and qt supplied and why

higher price = higher qt supplied --> want to maximize profits

24

change in supply vs in qt supplied

in supply = curve shift
in qt supplied = along the curve or along a new curve

25

change in price effect on supply curve

stays the same. mvmt along it or new one

26

change in variable other than price on supply curve

shift of the supply curve

27

which variable changes will shift supply curve (5 ex.)

1) price of inputs
2) technology
3) Gvt taxes and subsidies
4) Prices of other products
5) number of suppliers

28

2 possibles shift of supply curve

Rightward -> increase
Leftward -> decrease

29

why price of inputs influences supply curve

affects profits

30

why technology influences supply curve

can produce more (because production is more efficient)