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Economics > Unit 2 > Flashcards

Unit 2 Flashcards

(53 cards)

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1
Q

Demand

A

the desire willingness and ability to buy a product

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1
Q

Law of Demand

A

quantity demand of a good or service varies inversely with its price

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2
Q

Demand Schedule

A

its a table
a listing that shows the various quantities demanded of a particular product at all prices that might prevail in the market at a given time

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3
Q

Demand curve

A

its a graph
a graph showing the quantity demanded at each and every price that might prevail in the market

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4
Q

Change in Quantity Demanded

A

a movement along the demand curve that shows a change in quantity of the product purchased in response to a change in price

we move on the curve not a new curve

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5
Q

a. Change in demand

b. has ____ factors

A

a. new curve/line
b. 6

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6
Q

Substitution effect and ex.
Change in demand

A

the demand for a product increases if the price of the replacement goes up and vice versa
ex. butter is more expensive the demand for margarine goes up

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7
Q

Consumer income
Change in demand

A

increase in income means people can buy more stuff - > shifts right a loss in income shifts left (decrease in demand)

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8
Q

Consumer tastes
Change in demand

A

advertising, newsreports, fashion trends, introduction of new products time and change in season can effect consumer taste

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9
Q

Complements and ex.
Change in demand

A

the use of one good increases the use of another
ex. video games and playstation 5

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10
Q

Change in expectations and ex.
Change in demand

A

the way people think about the future
ex. if you think gas prices are going up tomorrow your going to buy it today -> demand is up today

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11
Q

Number of consumers and ex.
Change in demand

A

change in number of consumers in a firms market
ex. your the only ice cream shop in the area and a park opens by you
-> demand goes up

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12
Q

Supply
what direction is the line/curve?

A

amount of a product that would be offered for sale at all possible prices that could prevail in the market
direction is like a normal graph

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13
Q

Law of Supply

A

the principle that supplies will normally offer more for sale at high prices and less lower prices

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14
Q

Change in supply
has ____ causes

A

an increase or decrease in the amount of a product supplied at each and every price
new line
7

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15
Q

Change in quantity supplied

A

results in a change in the price of the product with factors other then price held constant
movement along line (no new line)

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16
Q

Cost of input
change in supply

A

a decrease in cost of input such as labor and packaging allows producers to produce more of the product at every price

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17
Q

Productivity
Change in supply

A

the supply curve can go right or left in relation to the workers productivity. if the workers are more motivated or work more efficiently productivity will increase causing more products to be produced

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18
Q

Technology
Change in supply

A

When a new machine of chemical is invented to lower cost of production, producers will make more product

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19
Q

Taxes and Subsidies
Change in supply

A

If the producers inventory if taxed or if fees are paid to receive a license to produce the cost of production increases causing the curve to shift

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20
Q

Government Regulations
Change in supply

A

when the gov establishes new regulations the cost of production can be affected causing a change in supply

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21
Q

Number of Sellers
Change in supply

Study These Flashcards
A

as more firms enter the industry the supply curve shifts to the right, in other words the larger number of suppliers the greater the market supply

22
Q

Expectations
Change in supply

Study These Flashcards
A

If producers think the price of their product will go up they may withhold some of the supply thus causing a left shift

23
Q

Equilibrium price

Study These Flashcards
A

the price that brings out an equality between the quantity demanded and the quantity supplied

24
Rationing
dividing up or allocating the scarce items among those who want them
25
How it changes demand, supply, and equilibrium on a graph: Demand shift left
Demand: shifts in new line, lower quantity demanded at each price Supply: same line, lower quantity Equilibrium: lower p & q
26
How it changes demand, supply, and equilibrium on a graph: Demand shifts right
Demand: new line shifts out, higher quantity demanded at each price Supply: same line, higher quantity supplied Equilibrium: Higher p & q
27
How it changes demand, supply, and equilibrium on a graph: Supply shifts right
Demand: same curve, higher quantity demanded Supply: new line, more quantity supplied at each price Equilibrium: Lower P and Higher Q
28
How it changes demand, supply, and equilibrium on a graph: Supply Shifts left
Demand: same curve, higher quantity demanded Supply: new line, shifts out/more quantity supplied at each price Equilibrium: Lower P Higher Q
29
Price support/floor ex.
a legally established price above the equilibrium price ex. a minimum wage (wage cannot go below a certain price/number)
30
Price ceiling ex.
max prices that are established below the equilibrium price ex. rent control (rent cannot go above a certain price)
31
Excise tax ex.
a tax is levied on specific products ex. cigarettes
32
Elasticity of demand
a measure of the responsiveness of the quantity demanded of a product to a change in its price
33
Elastic ex.
a given change in price causes a relatively larger change in quantity demanded ex. demand for vegetables is more in summer because their cheaper
34
Inelastic ex.
A given change in price causes a relatively smaller change in quantity demanded ex. table salt if it was a lot cheaper the demand would not change that much
35
Unitary elastic
a change in price will be offset exactly by a proportional change in quantity demanded
36
Elasticity coefficient table: a. Perfectly Inelastic b. Relatively Inelastic c. Unitary Elastic d. Relatively Elastic e. Perfectly Elastic
a. = 0 b. <1 c. = 1 d. >1 e. oo
37
Theory of Production
relationship between the factors of production and the output of goods and services
38
Short run
period of production that allows producers to change only the amount of the variable input called labor
39
Long run
period of production long enough for producers to adjust the quantities of all their resources, including capital
40
Diminishing return
output increases at a diminishing rate as more units available input are added
41
a. 3 Stages of production
a. based on the way marginal product changes as the variable input of labor is changed Increasing return Diminishing return Negative return
42
Supply Elasticity
a measure of the way in which quantity supplied responds to a change in price
43
Fixed cost
cost that a business incurs even if the plant is idle and output = 0
44
Overhead
total fixed cost
45
Variable cost
cost that changes when the business rate of operation or output changes
46
Total cost
sum of the fixed and variable costs
47
Marginal cost
extra cost incurred when a business produces one additional unit of product
48
Do you drop the negative with calculating elasticity or with equilibrium price?
drop it with elasticity keep when calculating equilibrium price
49
Subsidy
a payment that government makes to private producers or consumers for each unit of output that they produce or purchase meant to encourage support/production of certain products ex. grains or housing
50
a. Total revenue b. Relationship with elasticity ex.
a. the total receipts from the sale of its product b. The elasticity of demand tells suppliers how their total revenue will change if their price changes. Total revenue = total quantity sold x price of good. ex. With elastic demand – a rise in price lowers total revenue TR increases as price falls.
51
a. Normal good b. Inferior good
a. an increase in income will cause consumers to purchase more of a product (a normal good) than before each possible price b. an increase in income will cause consumers to purchase less of an inferior good, ex. generic mac n cheese basically people buy better quality products when they have more money
52
a. Shortage b. Surplus
a. an excess quantity demanded over quantity supplied b. an excess quantity supplied over quantity demanded

Economics (8 decks)

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