Chapter 3 Flashcards
quantity demanded
the amount of good or service that consumers want to purchase during some time period
demand schedule
a table showing the relationship between quantity demanded and the price of a commodity, other things being equal
demand curve
graphical representation of the relationship between quantity demanded and the price of a commodity, other things being equal
demand
the entire relationship between the quantity of a commodity that buyers want to purchase and the price of that commodity, other things being equal
substitutes in consumption
goods that can be used in place of another good to satisfy similar needs or desires
complements in consumption
goods that tend to be consumed together
change in demand
change in the quantity demanded at each possible price of the commodity, represented by a shift in the WHOLE demand curve
change in quantity demanded
change in the specific quantity of the good demanded, represented by a change from one POINT on a demand curve to another point, either on the original demand curve or on a new one
quantity supplied
the amount of a commodity that producers want to sell during some time period
supply schedule
a table showing the relationship between quantity supplied and the price of a commodity, other things being equal
supply curve
the graphical representation of the relationship between quantity supplied and the price of a commodity, other things being equal
supply
the entire relationship between the quantity of some commodity that producers wish to sell and the price of that commodity other things being equal
change in supply
a change in the quantity supplied at each possible price of the commodity, represented by a shift in the whole supply curve
change in quantity supplied
a change in the specific quantity supplied, represented by a change from one point on a supply curve to another point, either on the original supply curve or on a new one
market
any situation in which buyers and sellers can negotiate the exchange of goods or services
excess demand
a situation in which at the given price, quantity demanded exceeds quantity supplied
excess supply
a situation in which, at a given price, quantity supplied exceeds quantity demanded
equilibrium price
the price at which quantity demanded equals quantity supplied. also called the market-clearing price
disequilibrium price
price at which quantity demanded does not equal quantity supplied
disequilibrium
a situation in a market in which there is excess demand or excess supply
comparative statics
the derivation of predictions by analyzing the effect of a change in some exogenous variable on the equilibrium
absolute price
the amount of money that must be spent to acquire one unit of a commodity (aka money price)
relative price
the ratio of the money price of one commodity to the money price of another commodity; ratio of 2 absolute prices
what factors influence quantity demanded? (6)
- product’s price
- consumers income
- prices of other products
- tastes
- population
- expectations about the future
the price of a product and the quantity demanded are related (positively/negatively), other things being equal
negatively
the demand curve shows the relationship between the _______ _______ and_____
quantity demanded; price
true or false: when the price is held constant, there can be a change in quantity demanded
true; the whole demand curve can shift and result in a new point being made
the price of a product and the quantity supplied are related (positively/negatively)
positively
the supply curve represents the relationship between _____ _____ and _____
quantity supplied; price
what will changing any variable other than the product’s price do?
shift the curve to a new position
a demand curve will shift to the RIGHT when there is an (increase/decrease) in demand
increase
when the whole demand curve moves, this is a ________
change in demand
when a point along a demand curve moves, this is a ______
change in quantity demanded
what factors influence quantity supplied?
- product’s price
- cost of inputs
- number of suppliers
- government taxes or subsidies
- state of technology
- prices of other products
demand curve goes (up/down); supply curve goes (up/down)
demand: down
supply: up
what does ceteris paribus mean?
all other variables are held equal
quantity _____ or quantity _____ is used to refer to actual purchases
quantity bought or quantity exchanged
distinguish between flow and stock variables
time
- flow is per unit of time (x amount of eggs sold, how long did it take?); rate
- stock addresses a point in time (x amount of time given, how many eggs sold?); position
what would shift the demand curve to the right regarding income?
increase in income
what would shift the demand curve to the right regarding substitute products?
increase in price of substitute product
what would shift the demand curve to the right regarding complement products?
decrease in price of complement product
what would shift the demand curve to the right regarding taste?
change in taste in favor of a product
what would shift the demand curve to the right regarding population?
increase in population
what would shift the supply curve to the right regarding inputs?
decrease in the price of inputs
what would shift the supply curve to the right regarding technology?
innovation that decreases the price of inputs
what will shift the supply curve to the right regarding gov’t taxes/subsidies?
increase in subsidy, decrease in tax
what will shift the supply curve to the right regarding prices of substitutes?
decrease in the market price of the substitute (the item of focus will be more profitable)
what will shift the supply curve to the right regarding prices of complements?
increase in market price price of the complement
what will shift the supply curve to the right regarding number of suppliers
increasing the number of suppliers
what causes excess demand?
shortage of supply
what causes excess supply?
surplus in supply
excess supply causes (upward/downward) pressure on price
downward
excess demand causes (upward/downward) pressure on price
upward
