Econ Ch3
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.
