chapter 3 Flashcards
DEMAND AND SUPPLY
market
any arrangement that lets buyers + seller to get info and do business with each other
competitive market
which has buyers + many sellers that come together to sell standerided products
all markets involve
demand, supply, price and qaunity
demand
is a schedule or curve that shows diff amounts that are consumers are willing and able to purchase at every possible prices during a particular time period
quanity demand
Quantity demand of a good is the amount that the consumers plan to buy during a particular time period and at a particular price
subsiution effect
when price of good/service inc–> so people find other substitutes which results in a dec in quantity demanded of that good/service
income effect
when price of good/service inc relative to income–> so people cant afford the stuff they’d usually buy, this leads to a dec in quantity of that good/service
demand vs demand curve
demand- the entire relationship between the price of good and qaunity demanded of good
demand curve- shows how much of a good people want to buy at diff prices, assuming all other factors influencing buying desions r constant
explaing this:
Consumption is subject to diminishing marginal utility
Explanation- The more u consume of something the less value it gives u from consuming another unit
willingness to pay measures
mariginal benefit
a substitute
a good that can be used in place of another good
a complement and ex
a good thats used alongside another good
ex: When price of a substitute for an energy bar goes up (or when price of complement of an energy barr falls) → demand for energy bars increase
inferior good
as ur income inc the demad for this good dec
normal good
demand inc for this good as income inc
supply
curve that shows diff amounts of a good that producers are willing and able to make alible for sale at a diff prices during a specific time period
qaunity supplied
the quaity/amount that producer plan to sell at specific price during specific time
law of supply
inc price=inc in quantity bc this will make more revenue
producers are gonna supply goo donly if they ca cover least the marginal cost for making it
marekt demanded vs market supplied grpah
demand- shows quanity of good consumers wanna buy at diff prices
supplied - shows qunity producers wanna sell/supply stuff at diff prices
for a supply curve as qaunity inc…
marginal cost inc bc addiontal units of productions are needed which means the price of each good/unit inc too
change in supply
happpens wen stuff outisde of price changeing influences selling plans which leads to shift in supply curve
factors that change supply of good
changes in the prices of factors of production, related goods purchased,
substitutes in production,
complements in production.
How does a change in supply impact the supply curve?
inc/dec in supply shift supply curve to right/left
this means there’s also a change in quantity supplied at diff prices
equilbrium point
quantity demanded equals quantity supplied ( aka the market clearing price)
