Chapter 3 Flashcards
What is a demand schedule
A table showing the quanity demanded at any given price
What is Law of Demand
All else equal, as the price rises, quanity demanded goes down
What is the demand curve based on
The demand schedule
Is the demand curve a downward slope or upwards
downward
What can shift the demand curve
- Changes in prices
- Changes in # of consumers
- Changes in tastes
- Changes in expectations
- When income changes
When you have more money you buy less of what and more of what
Less of inferior goods and more of normal goods
Explain complement good
If a price of one good raises the demand of the other good will decrease
Explain substitute good
The raise in price for one good makes you more likely to consume the other one
What is a supply schedule
A table with quantity supplied at any given price
What causes movement along the supply curve
A increase or decrease in price
When does the supply curve shift
- Changes in input cost(is it less or more expensive to make something)
- Changes in prices of related good or services
- Changes in price expectations
- Changes in the number of prodcuers
When does surplus happen
When the prices are too high
What happens to the equilibrium quanity and equilibrium price when demand increase
equilibrium quanity: increase
equilibrium price: increase
What happens to the equilibrium quanity and equilibrium price when demand decrease
equilibrium quanity: decrease
equilibrium price: decrease
What happens to the equilibrium quanity and equilibrium price when supply increase
equilibrium quanity: increase
equilibrium price: decrease
