Principles of Microeconomics unit 1
Demand is
Consumers willingness and ability to buy a given quantity at a given price
Supply is affected by
Cost of inputs, technology, number of sellers, taxes and subsidies, expected prices, price of other goods, price
Externalities
Cost or benefit to bystanders to a market transaction
If the number of buyers decreases, the demand of a product will
Decrease
If the price of ketchup goes up, the demand curve for fries will
Decrease
The demand for Reese's pieces will _ if m&m's drop in price
Decrease
Causes of increase of supply are
Decrease of input price, improved technology, increase of number of sellers, expected price decrease, subsidies, decrease in price of alternate goods
If the price of peanut butter increases, the supply of Reese's pieces
Decreases and price increases
Market demand is determined by
Horizontal sum of all individual demands
If the Crane is invented, the supply of pyramids will
Increase
If the number of buyers increases, demand will
Increase
If the price of a complement decreases, the demand for an item will
Increase
If winter is here, the demand of dragon glass will
Increase
Causes of decrease in supply
Input prices rise, taxes, sellers exiting, expected price rise, increase in price of an alternate good
Demand definition
Is a schedule or curve that shows the various amounts of a product that consumers will purchase at each of several possible prices during a specified period of time
Cost
Is determined by what someone is willing to give up to get it
If sellers can get a higher price for an object they will
Make more of that object
Inferior goods
People buy more of these when income declined. (Nothing is this kind of item at all income levels)
Normal goods
People buy more of these when income rises
If supply and demand shift in opposite directions
Price follows shift in demand and quantity is undetermined
When supply and demand shift in the same direction
Price is ambiguous and quantity follows XYZ
Demand is affected by the following factors
Price, taste and preferences, substitutes, complements, income, number of buyers, expected price, expected income, taxes and subsidies
Surpluses happen when
Sellers are willing to sell more than buyers are willing to buy at a certain proce
If the price of chicken goes up, the demand of chicken will
Shift along the curve
Elasticity of demand is
The impact of a change in a price on quantity
Equilibrium is
The point where Buyers and sellers quantity demanded and quantity supplied are equal at a given price
Quantity supplied is
The quantity sellers will provide at a given price
Economics is
The study of how society allocates it's scarce resources
Supply is
The willingness and ability of a seller to provide a given quantity of a good or service at a given price
Comparative advantage
US making what they're good at making so that they can trade for what they don't make easily
If the price of inputs increases the supply of a good
Will decrease
If the price of inputs decreases the supply of a good
Will increase
