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Econ ch. 3 NEEDS REV
Econ ch. 3 NEDS REVISION
| Term | Definition |
|---|---|
| Change in demand (inc or dec) | Caused by a change in price, shifts the demand curve (left/right) |
| Market | Mechanism people have to exchange goods and services with each other |
| Types of markets | *Product markets *Resource/factor markets |
| Demand schedule | Listing/table of prices and corresponding quantity demanded by consumers * Inverse relationship |
| Relative Price | Price of something compared to another commodity |
| Money price | Price in IRL dollars |
| Market demand curve is derived by | adding all individual demand curve quantities at all prices |
| Market demand curve # | at the bottom (quantity) number where price and quantity intersect |
| Change in demand | Shifts the demand curve |
| Increase in demand | demand curve shifts to the right * Consumers willing to buy more at any price |
| Decrease in demand | demand curve shifts to the left * Consumers less willing to buy at any price |
| Shifts in the demand curve ARE NOT caused by | changes in price |
| Shifts in demand curve are caused by | Non-price determinants |
| Non-price determinants | * Income * Tastes and preferences * Prices of related goods * Expectations future prices income market availability * Market size (number of buyers) |
| Market size | Number of buyers * less buyers, less demand |
| Normal goods | Demand rises as income rises |
| Inferior goods | Demand rises as income drops |
| Increases when income increases | Output |
| Tastes and preferences | * Changes constantly with society * Demand increases with interest * One interest increases, alternate interest decreases |
| Substitute goods | Consumed in place of another to satisfy the same want * Price change in one changes demand of the other |
| Complementary goods | Goods that are consumed together Demand inc in one inc demand of other |
| Expectations of lower prices in the near future | lead to a decrease in demand |
| Expectations of higher prices in the near future | lead to a increase in demand |
| Change in the quantity demand | * Not demand curve shift * Caused by a change in price * Movement along the demand curve |
| Supply schedule | listing of prices and corresponding quantity supplied by producers (Direct relationship) |
| Supply/Demand curve | Visual representation of supply schedule |
| Market supply curve | Adding all the supply curve quantities at all prices |
| Left shift in supply curve | Decrease in supply |
| Right shift in supply curve | Increase in supply |
| Shift in the supply curve caused by | Non-price determinants of supply |
| Factors that shift the supply curve | * Technological advance/decline * Labor productivity * Cost of inputs * Price expectations * Taxes/subsidies * Number of firms in industry |
| Quantity demanded | How much of something consumers are willing to purchase at a particular price |
| Demand | Schedule of all purchase plans for each possible price of good |
| change in quantity demand is represented by | a move from one point on the demand curve to another |
| Change in demand involves | shifting the entire demand curve either to the left (dec) or to the right (inc) |
Created by:
1763
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