price determination in a competitive market

Question 1

demand

Answer 1

quantity buyers are willing and able to buy

Question 2

demand curve shows

Answer 2

inverse relationship of p and q
price up demand down

Question 3

changes in price cause ____ of demand

Answer 3

contraction/expansion

Question 4

what cause shifts in demand

Answer 4

population
inetrests
advertisement
related goods

Question 5

what is diminishing margins utility

Answer 5

the benefit derived from consuming the good falling (utility derived becomes 0)

Question 6

PED formula

Answer 6

%/\P

Question 7

PED def

Answer 7

change in responsiveness of QD to a change in price

Question 8

price elastic good

Answer 8

very repsosive
typically non-essential
PED greater than 1

Question 9

price inelastic good

Answer 9

not as responsive/less than the change in P
essential goods/inferior
PED less than 1

Question 10

unitary elastic means

Answer 10

same change in price and change in demand (1)

Question 11

when demand does not change

Answer 11

perfectly inelastic (0)

Question 12

price changes, there is no demand

Answer 12

infinity

Question 13

factors influencing PED

Answer 13

substitutes
necessity
addicition
proportion of income spent on good

Question 14

YED formula

Answer 14

%/\Y

Question 15

inferior good

Answer 15

income up, demand down
yes less than zero

Question 16

normal good

Answer 16

income up demand up
yes greater than 0

Question 17

lux good

Answer 17

income up demand up even more
yes bigger than 1

Question 18

xed formula

Answer 18

%/\P of B

Question 19

complementary goods have a _____ XED

Answer 19

negative
(one good increases in price, demand for both will fall)
demand curve downward sloping

Question 20

close compliments

Answer 20

small fall in price of one good, large increase in QD of the other

Question 21

substitutes

Answer 21

replace eachother
positive XED
up slope demand curve

Question 22

unrelated goods

Answer 22

XED=0

Question 23

supply

Answer 23

quantity of good a producer is willing and able to supply

Question 24

shifts of supply

Answer 24

weather
productivity
time
wage
number of firms
tech
substitutes

Question 25

elastic supply

Answer 25

PES bigger than 1

Question 26

inelastic supply

Answer 26

PES smaller than 1

Question 27

fixed supply

Answer 27

PES=0

Question 28

infinity supply

Answer 28

any demand can be met without changing price

Question 29

factors influencing PES

Answer 29

time
spare capacity
substitutability
barriers of entry (high=more inelastic)