# AMPP Chapter 2_Vocab

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1. Supply and Demand Analysis
A fundamnetal and powerful tool that can be applied to a wide variety of interesting and important problem
2. Supply Curve
Relationship between the qauntity of a good that producers are willing to sell and the price of the good

Qs=Qs(P)
3. Demand Curve
Relationship between the quantity of a good tht consumers are willing to buy and the price of the good.

Qd=Qd(P)
4. Substitues
Two goods for whcih an increase in the pirce of one leads to an increase in the quantity demanded of the other
5. Complements
Two goods for which an increase in the price of one leades to a decrease in the quantity demanded of the other
6. Equilibrium Price (Market Clearing)
Price that equates the quantity supplied to the qauntitiy demanded.

- 가격의 수요와 공급에 의해 상승 또는 하락의 압력을 받지 않아, 더 이상 움직이지 않는 상태. 시장의 균형 사태에 있다.
7. Market Mecahnism
Tendency in a free market for price to change until the market clears
8. Surplus
Situation in which the quantity supplied exceeds the quantity demanded
9. Shortage
Situation in which quantity demanded exceeds the qauntity supplied
10. Elasticity
Meausres the sensitivity of one variable to another.

Percentage change in one variable resulting from a 1% increase in another.
11. Price Elasticity of demand
Percentage change in quantity demand of a good resulting from a 1% increase in its pirce

Ep=(%△Q)/(%△P)

Ep=P△Q / Q△P

*usually negative number
12. Linear demand curve
Demand curve that is a straight line

Q=a-bP
13. Infinitely elastic Demand
Principle that consumers will buy as much of a good as they can get at a single price, but for any higher price the qunatity for any lower price the quantity demanded increases without limit

-Consumers will buy as much as they can at a single price P*
14. Completely inelastic Demand
Principle that consumers will buy a fixed quantity of a good regardless of its price
15. Income elasticity of demand
Percentage change in the quantity demanded, Q, resulting from a 1% increase in income

Ei=(I/Q)(△Q/△I)
16. Cross price elasticity of demand
Percentage change in the quantity demanded of one good resulting from a 1% increase in the price of another

EQaPb = (Pb/Qa)(△Qa/△Pb)

product a and Product b
17. Price elasticity of supply
Percentage change in quantity supplied resulting from a 1% increase in price
18. Point elasticity of demand
Price elasticity at a particular point on the demand curve
19. Arc elasticity of demand
Price elasticity calculated over a range of prices

Arc elasticity: Ep=(△Q/△P)(aver.P/aver.Q)
 Author: uhxm ID: 284658 Card Set: AMPP Chapter 2_Vocab Updated: 2014-10-02 00:46:14 Tags: AMPP Folders: economics Description: for KDI school Show Answers: