Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Microeconomics > Chapter 3 > Flashcards

Chapter 3 Flashcards

1
Q

Market is

A

A set of arrangements by which buyers and sellers interact in order to exchange goods and services

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Demand is

A

The quantity of a good buyers wish to purchase at each conceivable price with all other influences in demand remaining unchanged

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Supple is

A

The quantity of a good sellers wish to sell at each conceivable price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What is a homogenous and heterogenous good

A

Homogenous (like natural gas)- it stays the same no matter what supplier
Heterogenous (like Airbnb) all apartments are different

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

But there can be a zero supply below some price

A

no supplier can make a profit (on account of their costs)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is the relationship between demand, supply and cost

A

Cost and supply-positive

Cost and demand-negative

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is quantity demanded

A

The amount purchased at a particular price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is quantity supplied

A

The amount supplied at a particular price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What does the phrase ceteris paribus mean

A

the constancy of other influences

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What is the equilibrium price

A

It is the price at which quantity demand equals the quantity supplied

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Excess supply ___

A

exists when the quantity exceeds the quantity demanded at the going price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Excess demand __

A

Exists when the quantity demanded exceeds the quantity supplied at the going price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What happens above and below the equilibrium price on excess supply and excess demand

A

the equilibrium price excess supply exerts downward pressure on price, and
below the equilibrium excess demand exerts upward pressure on price.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What does it mean at non-equilibrium prices the short side

dominates.

A

when
trading takes place at prices other than the equilibrium price it is always the lesser of the quantity
demanded or supplied that is traded.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Is there any other cost other than monetary

A

For
example, coal burning power plants emit pollutants into the atmosphere; but the individual supplier
may not take account of these pollutants, which are costs to society at large, in deciding how
much to supply at different prices. Stated another way, the private costs of production would not
reflect the total, or full social costs of production.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

2 ways to express demand and supply relationships

A
  • Graphical

- equation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

On what axes there is price and quantity of demand

A

quantity-x

price-y

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

The demand curve is

A

a graphical expression of the relationship between price and

quantity demanded, with other influences remaining unchanged

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

The supply curve is

A

a graphical expression of the relationship between price and

quantity supplied, with other influences remaining unchanged.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Where supply and demand intercepts is

A

Equilibrium price for the market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

At any price below this the horizontal

distance between the supply and demand curves intercept represents

A

excess demand

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Other influences on quantity demanded

A

the incomes of buyers; buyer tastes; and expectations

about the future.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Substitute goods and are

A

when a price reduction (rise) for a related product reduces (increases)
the demand for a primary product, it is a substitute for the primary product

24
Q

Complementary goods are

A

when a price reduction (rise) for a related product increases
(reduces) the demand for a primary product, it is a complement for the primary product.

25
Q

What are inferior goods

A

one whose demand falls in response to higher incomes

26
Q

What are normal goods

A

one whose demand increases in response to higher incomes.

27
Q

What can be important for the demand for many commodities and services

A

Distribution of income ( is there a large middle class or if there is an inequality)

28
Q

How tastes and network can influence demand

A

If the fashion industry dictates that lapels or long skirts are de rigueur
for the coming season, some fashion-conscious individuals will discard a large segment of their
wardrobe, even though the clothes may be in perfectly good condition

29
Q

What is network economies

A

A situation in which a business will benefit through the feedback provided by those who use the product or service

30
Q

How expectations can influence the current demand

A

In our natural gas example, if households expected that the price of natural gas was going to stay
relatively low for many years – perhaps on account of the discovery of large deposits – then they
would be tempted to purchase a gas burning furnace rather than an oil burning furnace.

31
Q

What equilibrate the market

A

Variation in price

32
Q

How quantity demand graph will change when households start to earn more

A

Shift to the right horizontally

33
Q

What does comparative static analysis do

A

compares an initial equilibrium with a new equilibrium,
where the difference is due to a change in one of the other things that lie behind the
demand curve or the supply curve.

34
Q

What was the result of Bush;s decision to produce more ethanol an import less Brazilian cane sugar ethanol ethanol

A

Price on corn raised->demand for corn increased and the supply
could not be increased to keep up with the demand without an increase in price.

virtually all grains increased
in tandem with corn: the prices of sorghum and barley increased because of a switch in land
use towards corn on account of its profitability.

While farmers benefited from the price rise, consumers – particularly those in less developed
economies – experienced a dramatic increase in their basic living costs.

In 2013-2016 supply increased and prices stabilized

35
Q

Give an example of positively-sloping supply curve

A

only the
more efficient producers can make a profit at a low price, whereas at higher prices more producers
or suppliers enter the market – producers who may not be as lean and efficient as those who can
survive in a lower-price environment

36
Q

Give an example of a horizontal supplu curve

A

This is the practice of most retailers. For example,
the price of Samsung’s Galaxy is typically fixed, no matter how many are purchased – and tens
of millions are sold at a fixed price when a new model is launched

37
Q

Supply curves never slope ___

A

Downward

38
Q

How technology can influence the supply

A

As the cost will be lowered, suppliers will be willing to produce more at a lower cost

39
Q

How increase in salary of a worker will increase the price

A

It will raise or the quantity at a given price will lower

40
Q

How will the supply line change if new technologies come and now the suppliers produce the same output at a reduced price

A

It will change the angel, more towards x axes

41
Q

In real world what happens to demand and supply curves

A

They shift at the same time

42
Q

How supply graph can be vertical?

A

If the supplier put in fixed number of goods and will sell it at any price

43
Q

What are price controls

A

Government rules or laws that inhibit the formation of market-determined prices

44
Q

What are quotas

A

Physical restriction on output

45
Q

What is the problem with price ceilings?

A

they leave

demand of buyers unsatisfied

46
Q

Example of price ceiling and price floor

A

Price ceiling-apartment rent

Price floor-minimal wage

47
Q

What is the purpose of quotas

A

keeping prices higher than the free-market equilibrium price

48
Q

In what sector quotas are widespread?

A

Agriculture

49
Q

Market demand is

A

The horizontal sum of individual demands

50
Q

General equation form for demand/supply graph

A

P=a+bQ
a-vertical intercept
b-the slope

51
Q

How to obtain equilibrium price

A

Equal supply and demand equations, you get equilibrium quantity, which you plug in in one of the equations

52
Q

What causes a change in the demand relationship?

A

The prices of related goods
Consumer incomes
Tastes and network
Expectations

53
Q

Effect of the number of suppliers in the supply

A

The greater the number of firms, the greater the supply

54
Q

Why demand was stronger in 2002 than in 1997?

A

Income rise and mortgage decrease

55
Q

The Law of unintended consequences states that

A

Market controls may have consequences not envisaged or desired

Microeconomics (10 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions