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Microeconomics > Chapter 2 - SUPPLY AND DEMAND > Flashcards

Chapter 2 - SUPPLY AND DEMAND Flashcards

1
Q

The assumption that no relevant economic factors other than the product’s price are changing; Latin for “other things being equal”

A

ceteris paribus

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2
Q

Two goods that are often used together; a decrease in the price of one good leads to an increase in the demand for the other (or vice versa)

A

complements

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3
Q

A leftward shift on the demand curve

A

decrease in demand

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4
Q

The behavior of buyers; the amount of some good or service consumers are willing and able to purchase at each price.

A

demand

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5
Q

The quantity demanded at various per-unit prices

A

demand curve

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6
Q

A table that shows a range of prices for a certain good or service and the quantity demanded at each price

A

demand schedule

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7
Q

Potential buyer or consumer of good or service

A

demand side

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8
Q

A rightward shift on the demand curve

A

increase in demand

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9
Q

A good for which for which demand decreases when income increases (and vice versa)

A

inferior good

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10
Q

The idea that a higher price for a good or service leads people to demand a smaller quantity

A

law of demand

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11
Q

A way that people exchange goods and services by means of directly reciprocated transfers (unlike gifts), voluntarily entered into for mutual benefit (unlike taxation), that is often impersonal (unlike transfers among friends, family)

A

market

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12
Q

Many potential buyers, one potential seller; a type or market in which the seller has more relative power than the buyer and can use that power to set the price high

A

monopoly

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13
Q

Many potential sellers, but only on potential buyer; a type of market in which the buyer has more relative power than the sellers and can use that power to set price low

A

monopsony

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14
Q

A good for which demand increases when income increases (and vice versa)

A

normal good

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15
Q

Buyers and sellers know the quality and prices of goods and services from all sellers with certainty (no asymmetric or incomplete information)

A

perfect information

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16
Q

A market in which the power is diffuse and the playing field is relatively even

A

perfectly competitive market

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17
Q

What a buyer pays for a unit of the specific good or service

A

price

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18
Q

The quantity that buyers are willing and able to purchase at a particular per-unit price

A

quantity demanded

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19
Q

A good or service that we can use in place of another good or service; a decrease in the price of one leads to a decrease in demand for the other (or vice versa)

A

substitute

20
Q

Potential seller or producer of the good or service

A

supply side

21
Q

Additional costs to purchasing other than price

A

transaction costs

22
Q

A leftward shift of the supply curve

A

decrease in supply

23
Q

A rightward shift of the supply curve

A

increase in supply

24
Q

The goods and services that are used to produce another good or service

A

inputs

25
Q

The idea that higher price leads to a higher quantity supplied and a lower price leads to a lower quantity supplied

A

law of supply

26
Q

The quantity that producers are willing and able to sell at a particular price

A

quantity supplied

27
Q

The behavior of sellers; the amount of some good or service a producer is willing to supply at each price

A

supply

28
Q

Shows the quantity supplied at various prices

A

supply curve

29
Q

A table that shows a range of prices for a good or service and the quantity supplied at each price

A

supply schedule

30
Q

A change in which price and quantity move together

A

demand change

31
Q

When the quantity of supply (Qs) is equal to the quantity of demand (Qd) at a certain price; the combination of price and quantity where there is no economic pressure from surpluses or shortages that would cause price or quantity to change

A

equilibrium

32
Q

The only price where the plans of consumers and the plans of producers agree

A

equilibrium price

33
Q

Excess demand; occurs when demand is greater than supply

A

shortage

34
Q

A change in which price and quantity move in opposite directions

A

supply change

35
Q

Excess supply; occurs when supply is greater than demand

A

surplus

36
Q

The phenomenon in which we are pushed toward equilibrium when in surplus or shortage; Adam Smith’s concept that individuals’ self-interested behavior can lead to positive social outcomes

A

the invisible hand of the market

37
Q

The quantity at which quantity demanded and quantity supplied are equal for a certain price level

A

equilibrium quantity

38
Q

The difference between what consumers (as individuals or the market) would be willing to pay for a good or service and what they actually have to pay for it in the market

A

consumer surplus

39
Q

The difference between market price and the price at which firms are willing to supply the product

A

producer surplus

40
Q

The area above the priceline and below the demand curve

A

total consumer surplus

41
Q

The area below the priceline and above the supply curve

A

total producer surplus

42
Q

The sum of the producer and consumer surpluses; the area between the demand curve and the supply curve at the quantity being bought and sold; also called social surplus or economic surplus

A

total surplus

43
Q

Markets where goods or services are bought and sold illegally—either because they are prohibited or because the equilibrium price is illegal

A

black market

44
Q

The loss in total surplus that occurs whenever an action or a policy reduces the quantity transacted below the efficient market equilibrium quantity

A

deadweight loss

45
Q

A maximum price sellers are allowed to charge for a good or service (binding if set below equilibrium)

A

price ceilings

46
Q

Legal restrictions on how high or low a market price may go

A

price controls

47
Q

A minimum price buyers are required to pay for a good or service (binding if set above equilibrium)

A

price floors

Microeconomics (13 decks)

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