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45 Cards in this Set
- Front
- Back
- 3rd side (hint)
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Holding everything else constant, as the price rises, demand falls, and vice versa...
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Law of Demand
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The change in the quantity demanded of a good that results form a change in price, making the good more or less expensive relative to other goods that are substitutes...
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Substitution Effect
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The change in the quantity demanded of a good that results from the effect of a change in the good's price on consumers' purchasing power...
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Income Effect
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What is the latin phrase for all else equal?
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ceteris paribus
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A movement along the demand curve is caused by a change in price, true or false?
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True
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What variables other than price would shift the curve? (5)
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Income, price of related goods, tastes, populations and demographics, and expected future prices
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Variables that shift demand curve
Income- explain normal & inferior good |
normal good-a good for which the demanded increases as income rises, and vice versa
inferior good-a good for which demanded increases as income falls. (RAMEN) |
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Variables that shift demand curve
Price of related goods-explain substitues & complements |
substitutes-goods and services that can be used for the same purpose.
complements-goods and services that are used together. |
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Variables that shift demand curve
Tastes |
consumers can be influenced by an advertising campaign for a product.
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Variables that shift demand curve
Population/demographics |
demographics-characteristics of a population with respect to age, race, gender
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Variables that shift demand curve
Expected future prices |
consumers choose not only which products to buy but also when to buy them
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do you know everything on page 72 in the book?
it explains variables that shift market demand curves |
yes, be able to do both for increases and decreases for all variables.
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The amount of a good or service that a firm is willing and able to supply at a given price...
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Quantity supplied
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A table that shows the relationship between the price of a product and the quantity of the product supplied...
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Supply schedule
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A curve that shows the relationship between the price of a product and the quantity of the product supplied...
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Supply curve
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Holding everything else constant, increases in price cause increases in the quantity supplied, and vice versa...
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Law of Supply
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What are the variables that shift supply? (5)
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prices of inputs, technological, prices of substitutes in product, number of firms in the market, expected future prices
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A situation in which quantity demanded equals quantity supplied...
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Market equilibrium
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A market equilibrium with many buyers and many sellers...
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Competitive market equilibrium
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A situation in which the quantity supplied is greater than the quantity demanded...
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Surplus
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A situation in which the quantity demanded is greater than the quantity supplied..
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Shortage
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It is the interaction between ____ & ____ that determines equilibrium.
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supply and demand.
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A legally determined maximum price that sellers may charge...
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Price ceiling
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A legally determined minimum price that sellers may receive...
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Price floor
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The difference between the highest price a consumer is willing to pay and the price the consumer actually pays...
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Consumer Surplus
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The additional benefit to a consumer from consuming one more unit of a good or service...
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Marginal benefit
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The additional cost to a firm of producing one more unit of a good or service...
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marginal cost
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The difference between the lowest price a firm would have been willing to accept and the price it actually receives...
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Producer Surplus
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Producer surplus is profit. True or false.
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false
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Reasons top prefer a perfectly competitive market. (2)
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-Equilibrium results in economically efficient level of output.
-CS, PS are maximized |
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The reduction in economic surplus results from a market not being in competitive equilibrium...
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Deadweight Loss
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A market outcome in which the marginal benefit of consumers of last unit produced is equal to its marginal cost of production, and in which the sum of consumer surplus and producer surplus is at a maximum.
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Economic efficiency
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A market in which buying and selling take place at prices that violate government price regulations...
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black market
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What is a positive statement?
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Describes what will happen...if this, than that.
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What is a normative statement?
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Describes what should happen...what should we do?
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Increasing the supply of money causes inflation. Is this a positive or a normative statement?
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positive
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Inflation rate...
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the percentage increase in the price level from one year to the next.
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Define GDP:
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the market value of all final goods and services produced in a country during a period of time.
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Final good...
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a good or service purchased by a final user.
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Intermediate good or service...
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a good or service that is an input into another good or service -> tire on a truck
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3 approaches to finding GDP
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value-added approach
income approach spending approach |
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value-added approach to finding GDP
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add up all total values of production
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income approach to finding GDP
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add up all incomes received in the whole economy.
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spending approach to finding GDP
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breka up all spending into 4 broad categories:
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consumption, investment, government spending, net exports. C + I + G + NX = Y |
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consumption(c):
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spending by households, not including on houses.
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