Chapter 3: Demand, Supply, And Market Equilibrium Flashcards
1
Q
Other things are equal, as price falls
A
The quantity demanded rises
2
Q
Other things are equal as price rises
A
The quantity demanded falls
3
Q
Income effect
A
Lower price increases the purchasing power of a buyer’s money income
4
Q
The substitution effect
A
At a lower price buyers can substitute a product to other products that are relatively more expensive
5
Q
Determinants of demand
A
1- consumers' tastes 2- the number of buyers in the market 3- consumers' income 4- the prices of related goods 5- consumer expectations
6
Q
How to obtain market supply curve
A
Horizontally add the supply curves of the individual producers
7
Q
Determinants of supply
A
1- resource prices 2- technology 3- taxes and subsidies 4- prices of other goods 5- producer expectations 6- the number of sellers in the market
