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ECON 2106- Fall 2012 > Chapter 4- Supply and Demand > Flashcards

Chapter 4- Supply and Demand Flashcards

1
Q

Section 4.3 Exhibit 5

Graph the following:

  1. When the price of a compliement falls or the price of a substitute rises.
  2. When income increases (normal good)
  3. When income increasaes (inferior good)
  4. Increase in the number of buyers in the market.
  5. Tastes change in favor of the good
  6. Future price increase expected.
A
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2
Q

Section 4.5 Exhibit 3

Graph the following:

  1. Input price (wages) increase.
  2. Input price falls.
  3. Price decreases for a substitute in production
  4. Producer expects now that the price will be lower later.
  5. Number of suppliers increase.
  6. Taxes rise.
  7. Technological advance occurs.
  8. Bad weather.
A
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3
Q

A change in _____ _____ _____ leads to a change in quantity demanded, illustrated by a _____ _____ demand curve

A

a good’s price; movement along

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4
Q

A change in demand is caused by changes in any of the other factors (beside’s a good’s own price) that would affect how much of the good is purchased: the ______ _____ ______ ______, ______, the ______ of buyers, ______, and ______.

A

prices of related goods; income; number; tastes; expectations

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5
Q

An increase in demand is represented by a _____ shift in the demand curve; a decrease in demand is represented by a _____ shift in the demand curve.

A

rightward; leftward

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6
Q

Two goods are called _____ if an increase in the price of one causes the demand curve for another good to shift to the _____.

A

substitutes; right

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7
Q

For normal goods an increase in income leads to a(n) _____ in demand, and a decrease in income leads to a(n) _____ in demand, other things being equal.

A

increase; decrease

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8
Q

An increase in the expected future price of a good or an increase in expected future income may _____ demand.

A

Increase

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9
Q

According to the Law of Supply, the higher the price of the good, the greater the _____ _____, and the lower the price of the good, the smaller the, _____ _____.

A

quantity supplied; quantity supplied

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10
Q

The quantity supplied is positively related to the price because firms supplying goods and services want to increase their ____________ and because increasing ____________ costs mean that the suppliers will require _________ prices to induce them to increase their output.

A

profits;

production

higher

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11
Q

The market supply curve is a graphical representation of the amount of goods and services that suppliers are ________ and _________ to supply at various prices

A

willing;

able

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12
Q

Possible supply determinants (factors that determine the position of the supply curve) are ________ prices; ________ of suppliers; and __________, _________, __________, and ____________

A

input;

expectations;

number;

technology;

regulation;

taxes and susidies;

weather

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13
Q

A fall in input prices will _________ the costs of production, causing the supply curve to shift to the _________

A

lower;

right

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14
Q

The supply of a good __________ if the prices of one of its substitutes in production falls

A

increases

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15
Q

The supply of a good ________ if the price of one of its substitutes in production rises

A

decreases

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16
Q

A(n) ______ is the process of buyers and sellers _____ goods and services

A

markets; exchanging

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17
Q

The important point about a makert is what it does— it facilitates ______.

A

trade

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18
Q

_____, as a group, determine the demand side of the market. ____, as a group, determine the supply side of the market.

A

buyers; sellers

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19
Q

A(n) ____ market consists of many buyers and sellers, no single one of whom can influence the market price.

A

competitive

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20
Q

According to the law of demand, other things being equal, when the price of a good or service falls, the ____ increases.

A

quantity demanded

21
Q

An individual ____ curve reveals the different amounts of a particular good of a person would be willing and able to buy at various possible prices in a particular time interval, others things being equal.

A

demand

22
Q

The ____ curve for a product is the horizontal summing of the demand curves of the individuals in the market.

A

market demand

23
Q

What is the Law of Demand?

A
24
Q

This is an example of a….

A

Demand Schedule

25
Q

Graph an increase and a decrease in demand (on the same graph).

A
26
Q

If the price of Good A increases, then the demand of its substitute (Good B) does what?

If the price of Good A decreases, then the demand of it substitute (Good B) does what?

A
27
Q

If the price of Good A increases, then its complement (Good B) does what?

If the price of Good A decreases, then its complement (Good B) does what?

A
28
Q

If income increases, then demand for a normal good would increase or decrease?

If income decreases, then demand for a normal good would increase or decrease?

A
29
Q

If income increases, then demand for an inferior good would increase or decrease?

If income decreases, then demand for an inferior good would increase or decrease?

A
30
Q

On the same graph, show the difference between Change in Demand and Change in Quantity Demanded.

A
31
Q

What is the Law of Supply?

A
32
Q

Graph an Increase and Decrease in Supply.

A
33
Q

On the same graph, show the difference between Change in Supply and Change is Quantity Supplied.

A
34
Q

market

A

the process of buyers and sellers exchanging goods and services

35
Q

individual demand curve

A

a graphical representation that shows the inverse relationship between price and quantity demanded

36
Q

law of demand

A

the quantity of a good or service demanded varies inversely (negatively) with its price, cetaris paribus

37
Q

competitive market

A

a market where many buyers and sellers have little market power- each buyer’s or seller’s effect on market price is negligible

38
Q

market demand curve

A

the horizontal summation of individual demand curves

39
Q

individual demand schedule

A

a schedule that shows the relationship between price and quantity demanded

40
Q

change in demand

A

the prices of related goods, income, number of buyers, tastes, and expectations can change the demand for a good; that is, a change in one of these factors shifts the entire demand curve

41
Q

substitutes

A

an increase (decrease) in the price of one good causes the demand curve for another good to shift to the right (left)

42
Q

complements

A

an increase (decrease) in the price of one good shifts the demand curve for another good to the left (right)

43
Q

change in quantity demanded

A

a change in a good’s own price leads to a change in quantity demanded, a move along a given demand curve

44
Q

normal good

A

if income increases, the demand for a good increases; if income decrease, the demand for a good decreases

45
Q

inferior good

A

if income increases, the demand for a good decreases; if income decreases, the demand for a good increases

46
Q

law of supply

A

the higher (lower) the price of the good greater (smaller) the quantity supplied

47
Q

individual supply curve

A

a graphical representation that shows the positive relationship between the price and quantity supplied

48
Q

Market supply curve

A

a graphical representation of the amount of goods and services that suppliers are willing and able to supply at various prices

ECON 2106- Fall 2012 (2 decks)

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