Test 2 Flashcards
(40 cards)
Market (Under Capitalism)
A group of buyers and sellers of a particular good or service. The buyers determine the demand for the product
The sellers determine the supply of the product
Competitive market
A market in which there are so many buyers and sellers that each has very little impact on the market price
Perfectly Competitive
The goods offered for sale are all exactly the same
Buyers and sellers are so numerous that no one person can affect the market
Demand
The schedule of the quantity of a product which consumers are both willing and able to
buy at various prices
The Law of Demand
The quantity demanded of a good falls when the price rises
Raised prices, demand goes down
Demand Schedule
A table that shows the relationship between the price of a good and the
quantity demanded
Variables That Influence Demand?
- Income
- Price of related goods
- Taste (what people like)
- Expectations
- Number of Buyers
Supply
The schedule of the quantity of a product which producers are both willing and able to
produce and make available for sale at various prices
The Law of Supply
The quantity supplied of a good rises when the price of a good rises
Supply Schedule
A table that shows the relationship between the price of a good and the quantity supplied
Supply Curve
A graph of the relationship between the price of a good and the quantity supplied
Variables That Influence Supply
- Input Prices
- Technology
- Expectations
- Number of Sellers
Input Prices
The cost of producing the product
3 Situations That Are Represented on the Supply and Demand Graph
- Equilibrium
- Surplus
- Shortage
Equilibrium
A situation in which the market price has reached the level at which quantity
supplied equals quantity demand
Surplus
A situation in which quantity supplied is greater than quantity demanded
Shortage
A situation in which quantity demanded is greater than quantity supplied
Types of Goods
- Normal Goods
- Inferior Goods
- Substitute Goods
- Complimentary Goods
- Independent Goods
Normal Goods
Goods that people buy more of as their income increases
Clothing
Inferior Goods
Goods that people buy less of as their income increases
Spam
Substitute Goods
Two or more products that can be used for the same purpose
Fan and Air Conditioner
Complimentary Goods
Products that are normally used together
Shoes and Shoelaces
Independent Goods
Products that have no direct relationship with each other
Utility
The ability of a product or service to satisfy some consumer want
