Chap 4 Quiz Flashcards
What are the determinants of individual demand?
Income, price of substitutes, price of goods.
What is the determinant of quantity demanded?
Price.
What does the law of demand state?
Buy more if price falls.
What happens to the demand for good B if the price of good A goes up?
Demand for B goes down.
What does ‘ceteris paribus’ mean?
All other things equal.
What is demand in economic terms?
A math function for demand of something and the variable that influences it.
What happens to demand if the price of a complement rises?
Demand falls.
What does a rightward shift in the demand curve indicate?
Outward shift in demand.
What is the relationship between change in quantity demanded and the demand curve?
Change in quantity demanded causes movement along the demand curve.
Does a change in price cause a shift in the demand curve?
No, it does not cause a shift in the demand curve.
What is a demand schedule?
The relationship between the price of a good and quantity demanded.
What is the relationship between a demand schedule and a demand curve?
Demand schedule equals demand curve/graph.
What is the substitution effect?
When the price of a good rises, consumers switch to substitutes.
What is the income effect?
If income increases, individual demand decreases because purchasing power decreases.
What doesn’t shift demand?
Price
What deals with price?
Movement
Inward goes
Left
Outward goes
Right
The relationship between price and quantity supply is
Positive
Profit is
Total Revenue - Total Cost
Supply curve slope upward because of
An increase in price acts as an incentive for producers to produce more.
