Chapter 2 Flashcards
What creates a change ALONG the supply curve?
Only price
What creates a change in quantity supplied?
Price of the good ONLY
What creates a change in quantity demand?
Price of the good itself ONLY
What creates a change along the demand curve?
Price of the good itself ONLY
What to do/not to do with an exogenous variable and the demand curve?
Exogenous means it is outside, so NOT PRICE, as price is endogenous. Price is the only thing that can cause movement ALONG the demand line, so then you must create a NEW demand curve, or shift.
What to do/not to do with an endogenous variable and the supply curve?
Endogenous means it is inside, so it is the PRICE. Price moves ALONG the supply curve, so do that. DO NOT make a NEW supply curve.
What to do/not to do with an endogenous variable and the demand line?
Endogenous means inside, so price. Price is the only thing that moves ALONG the demand line, so do that. DO NOT make a NEW demand line.
What to do/not to do with an exogenous variable and the supply curve?
Exogenous means outside of the graph, so is not price. Price is the only thing that moves ALONG the supply curve, so DO NOT move along. Therefore, you must make a NEW curve.
What is the difference between quantity and quantity demanded?
Quantity is quantity in its totality, so the ENTIRE line. Quantity demanded is quantity demanded at one point (one price), so is ONE POINT on the demand line.
What is the difference between supply and quantity supplied?
Supply is the supply in its entirety, so the ENTIRE line. Quantity Supplied is how much product is supplied at one point, so is just ONE POINT on the line.
What is a complementary good?
Two goods like peanut butter and jelly: when one buys peanut butter, one also buys jelly. So, when the price of peanut butter rises, and people buys it less (demand goes down), people will buy less jelly. The DEMANDS for complementary goods MATCH.
What is a supplementary good?
Goods like Apple and Microsoft. People buy Microsoft when Apple is too expensive. Therefore, when the price of Apple increases, and the demand for Apple decreases, then the demand for Microsoft will increase because people will not be able to afford Apple. They will only be able to afford Microsoft, so will only buy Microsoft. Their DEMANDS OPPOSE.
What is a normal good?
?
What is a luxury good?
?
What is a giffen good?
A good who’s consumption increases as its price increases.
