4. Chapter 4 Flashcards
What is the market?
What is a monopoly?
A group of buyers and sellers of a particular good or service
Monopoly is when a market has only one seller and this seller sets the price (local tv station)
What is the competitive market?
A market in which there are many buyers and many sellers so that each has a negligible impact on the market price
No single buyer of ice cream can influence the price of ice cream because each buyer purchase only a small amount
What does perfectly competitive mean?
A market which has two characteristics:
- The goods offered for sale are all exactly the same
- The buyers and sellers are so numerous that no single buyer or seller has any influence over the market price
What is the quantity demanded?
What is the market demand?
The amount of a good that buyers are willing and able to purchase
Market demand is the sum of all the individual demands for a petticoat good or service
What is the law of demand, the demand schedule, and the demand curve?
Law of demand- the claim that the quantity demanded of a good falls when the price of the food rises (if all other things equal)
Ice cream scoop costs more so you want less
Demand schedule- a table that shows the relationship between the price of a good and the quantity demanded
Demand curve- a graph of the relationship between the price of a good and the quantity demanded
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What is it called when a demand curve shifts to the right? To the left?
What variables shift the demand curve?
To the right- increase in demand
To the left- decrease in demand
Page 67 graph
Income Prices of related goods Tastes Expectations Number of buyers
What are substitutes and compliments (in demand)?
substitutes are Two goods for which an increase in price of one leads to an increase in demand of the other
Example: hot dogs and hamburger, sweaters and sweatshirts, movie tickets and streaming services
Complements are two good for which an increase in the price of one leads to a decrease in the demand for the other
Examples: gas and automobiles, computers and software, peanut butter and jelly
What is the quantity supplied?
The amount of a good that sellers are willing and able to sell
What is the law of supply?
What is the supply schedule?
What is the supply curve?
Law of supply- claims that the quantity supplied of a good rises when the price of a good rises
Supply schedule- a table that shows the relationship between the price of a good and the quantity supplied
Supply curve- a graph of the relationship between the price of a good and the quantity supplied
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What are the variables that influence the supply curve (sellers)?
Price of the good itself moves a point along the supply curve
Input prices (price of items require to make good) shift the supply curve
Technology shifts the supply curve
Expectations shift the supply curve
Number of sellers shifts the supply curve
What is the equilibrium?
Equilibrium price?
Equilibrium quantity?
Equilibrium is where the price has reached a level where quantity supplied equals quantity demanded (the intersection point of the supply and demand curves on a graph)
Equilibrium price is the price that balances the quantity supplied and demanded
Equilibrium quantity is the quantity supplied and the quantity demanded at equilibrium price
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What is a surplus and what is a shortage?
Surplus is a situation in which quantity supplied is greater than quantity demanded (area above equilibrium on a graph)
Shortage is a situation in which quantity demanded is greater than quantity supplied
(Area below equilibrium on graph)
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What is the law of supply and demand?
The claim that the price of any good adjusts to bring the quantity supplied and the quantity demanded for that good into balance
What is a shift in the supply or demand curve called?
What is a movement along a fixed supply or demand curve called?
A shift in the curve is called a change in supply or demand
A movement along a fixed supply curve is called a change in quantity supplied or demanded
Examples of page 78-79
