Microeconomics CH 4

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PandaSaurusRex
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14074
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Microeconomics CH 4
Updated:
2010-04-12 12:35:30
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Supply and Demand
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CH 4 Supply and Demand
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  1. Demand
    Willingness and ability to buy. Quantity varies inversely to Price.
  2. The Law of Demand
    • Quantity demanded rises as price falls, other things constant
    • or
    • Quantity demanded falls as price rises, other things constant
  3. Demand Curve
    The graphic representation of the relationship between price and quantity demanded. As price goes up Demand goes down.
  4. Demand
    Refers to a schedule of quantities of a good that will be bought per unit of time at various prices, other things constant.
  5. Quantity Demanded
    Refers to a specific amount that will be demanded per unit of time at a specific price other things constant.
  6. movement along the demand curve
    the graphical representation of the effect of a change in price on the quantity demanded.
  7. shift in demand
    the graphical representation of the effect of anything other than price on demand.
  8. Shift Factors of Demand
    • 1. Society's income.
    • 2. The prices of other goods.
    • 3. Tastes.
    • 4. Expectations.
    • 5. Taxes on and subsidies to consumers.
  9. 1. Rise in income
    Rise in demand. more money more nice stuff.
  10. Price of other goods
    When price of a good declines, the demand for its compliment increases.
  11. Tastes
    Rockshows or TV
  12. Expectations
    If you expect the price to fall you may post pone purchasing until later.
  13. Taxes and Subsidies
    • Taxes cause a decrease in demand for goods with tax.
    • Subsidies cause an increase in demand by giving a tax holiday, or other.
  14. Market Demand Curve
    Is the horizontal sum of all individual demand curves.
  15. Market Demand Phenomena
    • 1. At lower prices, existing demanders buy more.
    • 2. At lower prices, new demanders enter the market.
  16. Law of Supply
    • Quantity supplied rises as price rises, other things constant.
    • or
    • Quantity supplied falls as price falls, other things constant.
  17. Supply Curve
    The graphical representation of the relationship between price and quantity supplied. As one increases the other increases.
  18. Supply
    Refers to a schedule of quantities a seller is willing to sell per unit of time at various prices, other things constant.
  19. Quantity Supplied
    Refers to a specific amount that will be supplied at a specific price.
  20. Movement along a supply curve
    The graphical representation of the effect of a change in price on the quantity supplied.
  21. Shift in supply
    the graphical representation of the effect of a change in a factor other than price on supply.
  22. Shift Factors of Supply
    • 1. Price of Inputs
    • 2. Technology
    • 3. Expectations
    • 4. Taxes and Subsidies
  23. Price of Inputs
    Supply falls when price of inputs rises. If costs rise substantially a firm might even shut down.
  24. Technology
    Advances in Technology increase supply.
  25. Expectations
    Expectations can increase or decrease supply depending. If prices expected to be higher later. Supplier may take some product off the shelf for sale later. Decreasing supply now and increasing it later.
  26. Taxes and Subsidies
    • Taxes on suppliers reduces supply
    • Subsidies increase supply.

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