Help
Options
Didn't know it?
click below
click below
Knew it?
click below
click below
Don't Know
Remaining cards (0)
Know
retry
shuffle
restart
0:00
Embed Code - If you would like this activity on your web page, copy the script below and paste it into your web page.
Normal Size Small Size show me how
Normal Size Small Size show me how
Chapter 3
Microeconomics
| Term | Definition |
|---|---|
| Competitive Market | -many buyers and sellers -same good or service |
| Supply and Demand Model | model of how competitive a market works/5 key elements: demand curve, supply curve, demand and supply curve shifts, market equilibrium, changes in market equilibrium |
| Demand Schedule | table that shows how much of a good or service consumers will buy at different prices |
| Law of Demand | negative relationship btw the quantity demanded and the price - quantity demanded increases as price decreases -bc of this demand curve is downward sloping |
| Increase in Demand | the quantity demanded rises for any given price/increase in pop. generates this (know the difference btw demand-broad and quantity demanded-specific quantity associated with specific price) |
| Movement along the demand curve | change in the quantity demanded of a good that is the result of a change in that good's price (different from the shift in a demand curve) |
| Substitutes | two goods are substitutes if a fall in the price of one of the goods makes consumers less willing to buy the other good |
| Complements | two goods are complements if a fall in the price of one good makes people more willing to buy the other good |
| Normal Goods | when a rise in income increases the demand for a good (normal case) it is a normal good |
| Inferior Goods | when a rise in income decreases the demand for a good |
| Market Demand Curve | the horizontal sum of the individual demand curves of all consumers in that market |
| A decrease in the price of a good will result in: | increase in the quantity demanded |
| If the demand for tires goes down when the price of gas goes up, then tires and gas are: | complements |
| Supply Schedule | table that shows how much of a good or service producers will supply at different prices - as price falls, the quantity supplied falls |
| Supply Curve | graphically shows how much of a good or service producers are willing to sell at any given price - typically upward sloping |
| Increase in Supply | a greater quantity is supplied for any given price - a shift is a change in the quantity supplied of a good at any given price |
| Movement along the supply curve | change in the quantity supplied of a good that is the result of a change in that good's price (different from shift) |
| Decrease in Supply | leftward shift of the supply curve: at any given price there is a decrease in the quantity supplied |
| Input | a good that is used to produce another good ex; labor, machinery, raw materials |
| What causes a Supply Curve to Shift? | -Changes in input -Changes in the prices of related goods and services -Changes in technology -Changes in expectations -Changes in the number of producers |
| Market Supply Curve | horizontal sum of the individual supply curves of all firms in that market |
| If the price of a commodity increases, you can expect the: | quantity supplied to increase |
| A leftward shift of a supply curve could be caused by: | an increase in the cost of an input |
| Equilibrium in a competitive market: | when the quantity demanded of a good equals the quantity supplied of that good |
| Equilibrium price (AKA market-clearing price) | the price at which the competitive market is at equilibrium -every buyer finds a seller and vice versa |
| Equilibrium quantity | quantity of the good bought and sold at that price |
| Market Equilibrium | occurs where the supply curve and demand curve intersect -equilibrium price is shown on y-axis -equilibrium quantity is shown on the x-axis |
| Surplus | exists when the quantity supplied exceeds the quantity demanded/occurs when the price is above its equilibrium level |
| Shortage | exists when the quantity supplied falls short of the quantity demanded/occurs when the price is below its equilibrium level |
| Equilibrium and Shifts of the Demand Curve: | -Increase in demand: leads to movement along supply curve due to a higher equilibrium price and higher equilibrium quantity -Decrease in supply: leads to a movement along the demand curve due to a higher equilibrium price and lower equilibrium quantity |
| Technology Shifts of the Supply Curve | -Increase in Supply Curve: leads to a movement along the demand curve to a lower equilibrium price and higher equilibrium quantity |
| Simultaneous Shifts of Supply and Demand (small decrease in supply) | Small decrease in supply-supply shift to left Large increase in demand-demand shifts to right -The increase in demand dominates the decrease in supply |
| Simultaneous Shifts of Supply and Demand (large decrease in supply) | Large decrease in supply- supply shifts left leads to small decrease in demand (demand shifts right) -the decrease in supply dominates the increase in demand |
| Equilibrium and Shifts of the Supply Curve | decrease in supply leads to a movement along the demand curve due to a higher equilibrium price and lower equilibrium quantity |
Created by:
kthomas96
Popular Economics sets