Chapter 3: demand and supply basics

Question 1

Comparative static analysis

Answer 1

Compares and initial equilibrium with a new equilibrium

Difference due to change of one of the things that lie behind demand or supply curve

Question 2

Equilibrium price

Answer 2

Equilibriates the markert

clears the market

Price at which quantity demanded equals quantity supplied

Question 3

Excess demand

Answer 3

Quantity supplied excedes quantity demanded at given price

Excerts upward pressure on price

Question 4

Excess supply

Answer 4

Quantity supplied exceeds quantity demanded at given price

Excerts downward pressure on price

Question 5

What happens at non-equilibrium

Answer 5

Short side dominates

What is traded is what suppliers are willing to sell

Lesser of the quantity of demand or supply that is traded

Happens a lot with price ceilings and price floors

Question 6

Supply schedules

Answer 6

Based on. Primarily cost of production of product in question

Question 7

Demand curve

Answer 7

Graphical expression of relationship of price and quantity demanded

We assume all exterior variables remain constant

Question 8

Supply curve

Answer 8

Graphical representation between relationship of price and quantity supplied

We assume all other things are constant

Question 9

Substitute goods

Answer 9

when a price reduction for a related product reduces the demand for a primary product, it is a substitute for the primary product

when a price rises for a related product increases the demand for a primary product, it is a substitute for the primary product

Question 10

Complementary goods

Answer 10

when a price reduction for a related product increases the demand for a primary product, it is a complement for the primary product

when a price rises for a related product increases reduces the demand for a primary product, it is a complement for the primary product

Question 11

Inferior good

Answer 11

Demand decreases due to rising income

Mans want to buy gyuer shit

Question 12

Normal goods

Answer 12

Demand increases when income rises

The gyuer shit

Question 13

Distribution of income

Answer 13

Important determinant of the demand of commodities and services

Question 14

Is taste constant

Answer 14

Not in evolving world buoooy

Question 15

Price floor

Answer 15

Sets bar above market-clearing price

Question 16

Quota

Answer 16

Right to supply a specific quantity of a good to the market

physical restriction on output

Question 17

Price ceiling

Answer 17

Sets bar under market sealing price

Question 18

Whats the main similarity between price floor and price ceiling

Answer 18

The quantity actually traded at certain price is less than the supply and demand quantity at the same price

Question 19

The goal of a marketing board

Answer 19

To ensure that price floors and quotas can be maintained

Question 20

Market demand

Answer 20

Horizontal sum of individual demands

Question 21

market

Answer 21

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

Question 22

demand

Answer 22

quantity buyers wish tu purchase at every conceivable price

Question 23

supply

Answer 23

quantity suppliers willing to supply at every conceivable price

Question 24

quantity demanded

Answer 24

the exact quantity demanded at a given price

Question 25

quantity supplied

Answer 25

the exact quantity supplied at a given price

Question 26

what might shift demand curve or cause change in demand relationship?

Answer 26

prices of related goods
consumer incomes
tastes and networks
expectations

Question 27

tastes and fashion

Answer 27

when goods or services become popular, the demand expands

Question 28

price expectations

Answer 28

if prices expected to rise in the future, demand expands today

Question 29

change in prices of related goods, incomes, preferences or price expectations will shift the demand cure or cause a move along the demand curve

Answer 29

shift in demand curve

Question 30

change in price results in what?

Answer 30

move along demand curve

Question 31

improvement of technology causes what?

Answer 31

expands the supply

Question 32

effect of input costs

Answer 32

rise in costs contracts supply

decrease in costs expands supply

Question 33

price controls

Answer 33

government rules or laws that inhibit the adjustment of price to clear markets

Question 34

law of unintended consequences

Answer 34

policy measures frequently produce impacts thet are unintended, and that uses impacts may undermine the primary goals of the regulation

Question 35

market demand curve sum

Answer 35

horizontal sum of individual consumers demand curves