Econ Ch3

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Demand schedule

A table that shows the quantity of a good or service demanded at different prices during a particular period

Match each of the following changes with its results: An increase in demand.

An increase in both equilibrium price and equilibrium quantity

Match each of the following changes with its results: An increase in both demand and supply.

An increase in equilibrium quantity

change in quantity demanded

a movement along a demand curve that results from a change in price

Examples of inferior goods

name brand grocery foods

supply curve slopes

upward and to the right

Model of demand and supply

uses demand and supply curves to explain the determination of price and quantity in a market

supply shifter

variable that can change the quantity of a good/ service supplied at each price

What makes the demand curve to the right?

A change in preferences that makes one good/ service more popular.

What results in a movement along the demand curve

A change in price, with no change in any of the other variables that effect demand

What will change the cost of producing any given quantity of the good/ service

A change in the price of labor, or some other factor of production

What shifts the demand curve to the left?

A change that makes it less popular

Match each of the following changes with its results: A decrease in demand.

A decrease in both equilibrium price and equilibrium quantity

Match each of the following changes with its results: An increase in supply.

A decrease in equilibrium price but an increase in equilibrium quantity

Which of the following causes a rightward shift of the supply curve?

A decrease in the cost of production

Inferior good

A good for which demand decreases when income increases. (greater population = greater demand)

Normal good

A good for which demand increases when income increases

Law of demand

A higher price leads to a reduction in quality demand and lower price leads to an increase in quantity demanded.

Match each of the following changes to its effect on the supply curve: A decrease in quantity supplied.

A leftward movement along the supply curve

Compliments

A reduction in the price of one good increases the demand for another

Substitutes

A reduction in the price of one good reduces the demand for another

Match each of the following changes to its effect on the supply curve: An increase in quantity supplied.

A rightward movement along the supply curve

Match each of the following changes to its effect on the supply curve: A decrease in supply.

A shift of the supply curve to the left

Match each of the following changes to its effect on the supply curve: An increase in supply.

A shift of the supply curve to the right

Change in quantity supplied

Change in price causes a movement along the supply curve

Examples of normal goods

Food, clothing, appliances

Demand curve

Graphical representation of a demand schedule

Law of supply

Increase in price results in an increase in quantity supplied

Examples of substitutes

Ipods and CD players, cereal and eggs, email and fax machine.

What suggests a behavioral relationship

Negative slope of the demand

What determines the quantity of a good or service sellers are willing to offer for sales

Price, Ceteris Paribus, Production cost

circular flow model

Provides a look at how markets work and how they are related to each other

Change in demand

Shift in a demand curve, one choice has a consequence on another

If a market price is higher than the equilibrium price, a _______ exists as the quantity demanded is_________ than the quantity supplied, and there is a tendency for the market price to _________ .

Surplus; less; fall

Things that affect supply

Technology, seller expectations, Natural events, number of services.

Shortage

The amount by which the quantity demanded exceeds the quantity supplied at the current price.

Markets

The institutions that bring together buyers and sellers.

quantity demanded

The quantity buyers are willing and able to buy of a good or service at a particular price during a particular period, all other things unchanged.

Quantity supplied

The quantity sellers are willing to sell of a good or service at a particular price during a particular period, all other things unchanged.

All of the following cause a shift of the demand curve for a good EXCEPT

a change in the price of that good.

In economics, the term supply refers to

a set of combinations of price per unit and quantity supplied per period, all other things equal.

Change in supply

a shift of the supply curve, which changes the quantity supplied at any given price

Supply schedule

a table that shows the relationship between the price of a good and the quantity supplied

All other things equal, if supply decreases

both the equilibrium price and the equilibrium quantity will fall.

demand curve slopes

downward and to the right

What does an improvement of technology result in

fewer/ less costly inputs are needed

Supply curve

graphical representation of a supply schedule, shows relationship between price and quantity

Examples of compliments

rackets and balls, eggs and bacon, pens and paper.

What does a demand curve show

relationship between price and quantity demanded

According to the law of demand, consumers buy more of a good as

that good's price decreases.

Surplus

the amount by which the quantity supplied exceeds the quantity demanded at the current price

If both demand and supply increase at the same time, we will be certain that

the equilibrium quantity will increase.

equilibrium price

the price at which the quantity demanded equals the quantity supplied

Equilibrium quantity

the quantity demanded and supplied at the equilibrium price

All other things equal, if the price of apples increases

the quantity supplied of apples will increase.


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