Midterms

Question 1

The interaction and agreement between buyers and sellers of trading or exchange

Answer 1

Market

Question 2

A consumer buys in a seller sells

Answer 2

Market

Question 3

Types of Market

Answer 3

Goods Makret
Labor Market
Financial Market

Question 4

The most common type of market because it is where we buy and sell goods

Answer 4

Goods Market

Question 5

Includes the stock market or securities of corporations are traded

Answer 5

Financial Market

Question 6

Financial Market Participants

Answer 6

Central bank
Bank
corporation
institutional
traders
retail traders brokers market makers government

Question 7

The willingness of a consumer to buy a commodity at a given price

Answer 7

Demand

Question 8

Shows the various quantities the consumer is willing to buy at various prices

Answer 8

Demand Schedule

Question 9

Shows how the quantity demanded is dependent on its determinants which is the price itself the most important of which is the price of the good itself

Answer 9

Demand Function

Question 10

A graphical illustration of demand schedule with the price being measured on the vertical axis (y and the quantity demanded of the horizontal axis (x)

Answer 10

Demand Curve

Question 11

Is felt when a change in the price of good changes on the consumers real income purchasing power which is the capacity to buy with a given income

Answer 11

Income effect

Question 12

The capacity to buy with a given income

Answer 12

Income purchasing power

Question 13

The volume of goods and services one can buy with his or her income

Answer 13

Purchasing power

Question 14

Felt when a change in the price of good changes due to alternative consumption of substitute goods

Answer 14

Substitution effect

Question 15

Felt when a change in the price of good changes due to alternative consumption of substitute goods

Answer 15

Substitution effect

Question 16

Formula for Demand

Answer 16

∆Q = Q2 - Q1
∆P = P2 - P1

Question 17

According to the Law of Demand, what kind of relationship does the price of a good and the quantity demanded of the good has?

Answer 17

Inverse Relationship

Question 18

How is the relationship inverse between the price of a good and the quantity demanded of that good.

Answer 18

As a price increases, the quantity demanded decreases
When is the price decreases, the quantity demanded increases

Question 19

Non-price determinants of demand (formula)

Answer 19

D = f (P, T, Y, E, PR, NC)

Question 20

Non Price Determants of Demand

Answer 20

Price (P)
Taste (T)
Income (Y)
Expectations (E)
Price of related goods (PR)
Number of Consumer (NC)

Question 21

If this determinant of demand decreases, the capacity to buy decreases and the demand will also decrease even when prize does remains the same. The opposite will happen when this determinants increases.

Answer 21

Consumer Income

Question 22

Improved ______ for product will cause a consumer to buy more of that good even if it’s price does not change.

this is a non price determinants of demand

Answer 22

Taste

Question 23

Another non price determinants is determined by future price and income

Answer 23

Consumer’s expectations

Question 24

A non price determinants where substitute goods are those that are used in place of each other

Answer 24

Prices of related goods

Question 25

Is also an important non price determinants that will affect market demand for a good

Answer 25

Number of consumers

Question 26

Simply a movement from one point to another on that curve

Answer 26

Shift of the demand curve

Question 27

When a change in the price of good causes the quantity demanded for that good to change

Answer 27

Shifts of the demand curve

Question 28

Quantity of goods that the seller is willing to offer for sale

Answer 28

Supply

Question 29

Shows the different quantities the seller is willing to sell at various prices

Answer 29

Supply schedule

Question 30

Shows the dependence of supply on the various determinants that affect it

Answer 30

Supply function

Question 31

What are the non-price determinants in supply?

Answer 31

1. Cost of production 2. technology 3. availability of raw

Question 32

How does these non-price determinants in supply can change the entire supply product?

Answer 32

They can cause and upward or downward change in the entire supply of the product, and this change is referred to as a shift of the supply curve

Question 33

What kind of relationship does the price and supply have?

Answer 33

Direct relationship

Question 34

How price and supply have a direct relationship?

Answer 34

As a price increases, the product supply also increases

Question 35

Movements along and shifts in the supply curve

Answer 35

Shift of supply curve

Question 36

What is the reason for a movement along the supply curve?

Answer 36

The change in the price of goods

Question 37

What happens when a supply increases due to a non price determinants?

Answer 37

Then entire supply curve will shift to the right to reflect an increase or to the left to reflect a decrease

Question 38

What are the shifts in the supply curve and what do they mean?

Answer 38

Shift to the right <— positve/increase Shift to the left —> negative/decrease

Question 39

A state of balance when demand is equal to supply

Answer 39

Equilibrium

Question 40

What does the equality in the equilibrium mean?

Answer 40

The quantity sellers are willing to sell is also the quantity buyers are willing to buy for a price

Question 41

What does surplus mean?

Answer 41

Excess supply; High price High supply Low demand

Question 42

Where is surplus located?

Answer 42

Above equilibrium

Question 43

What is shortage

Answer 43

Excess Demand; High Demand Low Supplies Low Prices

Question 44

Where is the shortage

Answer 44

Below equilibrium