Chapter 3: Demand, Supply, and Market Equilibrium Flashcards
What is a market?
A market brings together buyers (demanders) and sellers (suppliers) to exchange goods and services.
Name two examples of everyday consumer markets.
Local markets (e.g., corner gas stations, local bakeries) and online markets (e.g., Amazon.com).
What are stock exchanges?
Stock exchanges are marketplaces where stocks, bonds, and commodities are traded (e.g., NYSE, Chicago Board of Trade).
Who are the participants in labor markets?
New college graduates (sellers of labor services) and employers (buyers of labor services).
How do ride-sharing markets function?
Platforms like Uber and Lyft match buyers (customers needing rides) with sellers (drivers offering rides).
What are two key characteristics of markets?
Geographic scope (local, national, international) and the level of personal interaction (face-to-face vs. online).
What defines a competitive market?
Large numbers of independent buyers and sellers trading standardized products.
What are the key elements in market dynamics?
Demand, supply, price, and quantity, with price determined by the interactions of buyers and sellers.
What does demand represent?
Demand shows the quantities of a product consumers are willing and able to purchase at various prices over a specific time.
What is the law of demand?
As price decreases, quantity demanded increases, and vice versa (inverse relationship).
What distinguishes a change in demand from a change in quantity demanded?
A change in demand shifts the entire demand curve, while a change in quantity demanded moves along the same curve due to price changes.
Name a determinant that can affect demand.
Consumer tastes, number of buyers, consumer income, prices of related goods, or consumer expectations.
What does supply indicate?
Supply shows the amounts of a product that producers are willing to sell at different prices during a specific period.
What is the law of supply?
Higher prices lead to greater quantities supplied; lower prices lead to lesser quantities supplied (positive relationship).
How do changes in supply differ from changes in quantity supplied?
Changes in supply shift the supply curve, while changes in quantity supplied are movements along the curve due to price changes.
