Chapter 4 Flashcards
_____, and _____ determine both the quantity of each good produced and the price at which each good is sold.
Supply and Demand
Market
Group of buyers and sellers of a particular good or service.
Competitive Market
Market in which there are many buyers and sellers so each has a negligible impact on the market.
Characteristics of a Competitive Market
-The goods offered for sale are exactly the same
-The buyers and sellers are son numerous that none buyer or seller can influence the price.
If a market is competitive, sellers are ___________ because they can’t influence price
Price-takers
If a market has only one seller the market is known as _____
Monopoly
Quantity Demanded
Amount of a good that buyers are willing and are able to purchase.
Law of Demand
Other things being equal, and increase in the price of a good reduces the quantity demanded. While a decrease in the price, increases the quantity demanded of a good.
Demand Schedule
Table that shows the relationship between price of a good and the quantity demanded.
Demand Curve
Graph that shows the relationship with the price on the vertical axis and the quantity demanded on the horizontal axis. Slopes Downward.
Market Demand Curve
Sum of the quantities demanded by for each individual buyer at each price.
Shifts in the demand curve
- If buyers increase quantity demanded at each price goes right
- If buyers decrease quantity demanded at each price goes left
Factors that shift demand curve
-Income
-Prices of related goods
-Tastes
-Expectations
-Number of buyers
Normal Good
Increase in income leads to an increase in demand
Inferior good
Increase in income leads to a decrease in demand
Substitute Goods
If 2 goods can be used as the other.
Complement Goods
If 2 goods are used together.
Quantity Supplied
Amount of a good that sellers are willing and able to sell
Law of supply
Other things being equal, an increase in price of a good increase the quantity supplied of the good, And a decrease in the price exceeds the quantity supplied.
Supply Scheduled
Table that shows the relationship between the price of a good and the quantity supplied
Supply curve
Graph of the relationship with the price in the vertical axis and quantity on the horizontal.
Supply Curve
Graph of the relationship between price of a good and the quantity supplied.
Market supply curve
Sum of the quantity supplied for each individual supply curve. Total quantity supplied of a good at each price.
Shifts in the supply curve
-If the producers increase the quantity supplied at each price, shifts right
-If the producers decrease the quantity supplied, shifts left.
