Ch. 3 Flashcards
Consuming units in an economy; type of economic agent; plays roles of buyers and sellers
Households
An organization that transforms resources (input) into products (outputs); primary producing units in market economy; plays roles of buyers and sellers
Firms
Markets in which final goods and services are exchanged
Product/ Output Markets
Markets in which resources used to produce goods and services are exchanged (Labour market, land market, capital market)
Input/ Factor Markets
Dependent on following: price of product in question, income available to household, household’s amount of accumulated wealth, prices of other products available to household, household’s tastes and preferences, household’s expectations about future income, wealth, and prices
Demand of output
Shows how much of given product household would be willing to buy at different prices for given time period
Demand Schedule
Graph illustrating how much of a given product household would be willing to buy at different prices
Demand Curve
Negative relationship between price and quantity demanded
Law of Demand
As price rises, quantity demanded deceases; as price falls, quantity demanded increases
Ceteris Paribus
Amount (# of units) of product that household would buy in given period if it could buy all it wanted at current market price
Quantity Demanded
Increase or decrease in demand at same price
Change in Demand
Income, wealth, prices of other goods, tastes, and preferences and expected prices
Other determinants of Household Demand
Change in quantity demanded due to change in price is represented by this
Movement along Demand Curve
Goods for which demand goes up when income/ wealth is higher and for which demand goes down when income is lower
Normal Goods
Goods for which demand tends to fall when income rises
Inferior Goods
