micro Flashcards
(27 cards)
What is the law of demand?
As the price of a good decreases, the quantity demanded increases, and vice versa.
True or False: Demand is only affected by the price of the good.
False
What does a demand curve represent?
It represents the relationship between the price of a good and the quantity demanded.
Fill in the blank: When consumer income increases, the demand for _____ goods typically increases.
normal
What is the law of supply?
As the price of a good increases, the quantity supplied increases, and vice versa.
True or False: Supply curves slope downward.
False
What does a supply curve represent?
It represents the relationship between the price of a good and the quantity supplied.
What is equilibrium price?
The price at which the quantity demanded equals the quantity supplied.
Fill in the blank: A shift to the right in the demand curve indicates an _____ in demand.
increase
What causes a shift in the supply curve?
Factors such as production costs, technology, and number of suppliers.
True or False: A decrease in consumer preferences for a good will shift the demand curve to the right.
False
What is a surplus?
A situation where the quantity supplied exceeds the quantity demanded at a given price.
What is a shortage?
A situation where the quantity demanded exceeds the quantity supplied at a given price.
Fill in the blank: Price ceilings create _____ in the market.
shortages
What is the effect of a price floor on the market?
It can create a surplus if set above the equilibrium price.
True or False: Complementary goods have a direct relationship in demand.
False
What are substitute goods?
Goods that can replace each other in consumption.
Fill in the blank: An increase in the price of a substitute good will lead to an _____ in demand for the original good.
increase
What is elasticity of demand?
A measure of how much the quantity demanded changes in response to a change in price.
What does it mean if demand is elastic?
A small change in price leads to a large change in quantity demanded.
True or False: Necessities tend to have more elastic demand than luxuries.
False
What is the formula for calculating price elasticity of demand?
Percentage change in quantity demanded divided by percentage change in price.
Fill in the blank: A perfectly inelastic demand curve is represented by a _____ line.
vertical
What is the impact of a technological advancement on supply?
It typically increases supply by lowering production costs.
