Econ 2 Flashcards
(27 cards)
Demand
Different quantities that people are willing and able to buy at different prices
Macroeconomics
Behavior and decision making by large corprorations and the government
Law of demand
as price increases demand will decrease
Microeconomics
behavior and decision making by small firms and individuals
Inverse relationship
as quantity demanded increases, price decreases
Demand Curve
Illustrates the quantity consumers will demand at each and every price (how price influences quantity demanded)
Demand
How much do consumers want to buy of a good or service
Price
Most important factor affecting how much people buy
Market Demand
The sum of the individual demand curves at each price
Change in quantity demanded
caused by change in the price of the product, other things equal
Movement along demand curve
shows change in quantity of the product purchased in response to a change in price
Marginal Utility
How much satisfaction does someone get from the good or service
Income effect
limitations on income may decrease quantity demanded
Substitution effect
substitution may reduce quantity demanded
Demand Shifters
Change in.. Income Number of consumers Consumer taste and preferences Consumer Expectations Price of Substitute goods Price of complementary goods
Law of supply
as price goes up, quantity-supplied goes up
Change in Quantity Supplied
A change in price that causes a change in quantity of product supplied only creates a move along the supply curve
Change in Supply
When a variable OTHER THAN PRICE can cause market supply to increase or decrease at all prices
Cost of input
cost of materials to make product changes
of producers
Success of products and increased producers causes a shift to the right
Technology
Production costs can be cut due to new technology such as robotics, right shift
Government Policy
Taxes cause left shift if increased
Right shift if decreased
Natural Disasters
These may cause supply to decrease with a resulting shift to the left
Market Equilibrium
The point where buyers and sellers agree
