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Microeconomics > Chapter 3 - Demand, Supply and Price > Flashcards

Chapter 3 - Demand, Supply and Price Flashcards

1
Q

Differentiate quantity demanded and quantity bought

A

QD: desired quantity
QB: actual purchases

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2
Q

Demand can be influenced by (6)

A 
Products' own price
Consumers' income
Prices of other products
Tastes
Population
Expectations about the future
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3
Q

The price of a product and the QD are _ related

A

Negatively

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4
Q

_ the price = higher the QD

higher the price = _ the QD

A

Lower, lower

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5
Q

What will shift the demand curve?

A

A change in variables other than price

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6
Q

What does a rightward shift indicate? Leftward?

A

Increase in demand

Decrease in demand

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7
Q

Differentiate change in demand vs change in QD

A

Change in demand: shift of entire curve

Change in QD: moving along the curve

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8
Q

Changes in the price of product imply moves _ the curve

A

Along

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9
Q

Change in variables other than the price of product _ the whole curve

A

Shifts

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10
Q

If demand shifts outwards, quantity increases and price _

A

Stays the same

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11
Q

Differentiate normal and inferior goods using income

A

When income rises,
Normal: QD increases, DC shifts right
Inferior: QD decreases, DC shifts left

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12
Q

Differentiate complementary and substitute goods

A

Complementary: consumed together, price of one increase and demand of the other decreases
Substitute: consumed in lieu of each other, price of one increases and demand of the other increases

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13
Q

Give examples of complementary and substitute

A

Complementary: milk and cereal
Substitute: coffee and tea

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14
Q

If milk price increases, QD _ but DC (does/doesn’t shift), meaning you move _ the curve

A

Decreases, doesn’t, along

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15
Q

For cereal, if milk price increases, the DC for cereal _ and the curve shifts _

A

Decreases, left

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16
Q

If tea price decreases, _ consumption of tea, meaning you move _ the curve

A

Increase, along

17
Q

For coffee, if tea price decreases, DC for coffee _ and the curve shifts _

A

Decreases, left

18
Q

What other 3 factors can shift demand?

A

Population, tastes, expectations about the future

19
Q

Demand is _ and supply is _ _

A

Negative, positive

20
Q

What is quantity supplied?

A

Amount desired to sell

21
Q

The price of product and quantity supplied are _ related. Why?

A

Positively

Because producers are interested in profits

22
Q

What will shift the supply curve?

A

A change in variables other than price

23
Q

Differentiate change in supply vs change in QS

A

Change in demand: shift of entire curve

Change in QD: moving along the curve

24
Q

If P substitute increases, demand shifts _ and supply shifts _

A

Right, left

25
Q

If P complement increases, demand shifts _ and supply shifts _

A

Left, right

26
Q

In a perfectly competitive market, buyers and sellers are _ _

A

Price takers

27
Q

What is the equilibrium price?

A

Every buyer finds a seller and every seller finds a buyer, the market “clears”

28
Q

Excess demand is (above/below) the EP causing an _ pressure on prices

A

Below, upward

29
Q

Excess supply is (above/below) the EP causing a _ pressure on prices

A

Above, downward

30
Q

What is the demand equation? Supply?

A

Demand: Q=a-bP
Supply: Q=c+dP

31
Q

How do you find P?

A

Equate the two equations

P=(a-c)/(b+d)

32
Q

Does minimum wage (inc.) effect supply and demand?

A

Effects supply not demand

Supply curve shifts lefts, demand curve doesn’t change

33
Q

What does an increase in demand cause?

A

Increase in both eq. price and eq. quantity

DC shifts right

34
Q

What does a decrease in demand cause?

A

Decrease in both eq. price and eq. quantity

DC shifts left

35
Q

What does an increase in supply cause?

A

Decrease in eq. price and increase in eq. quantity

SC shifts right

36
Q

What does a decrease in supply cause?

A

Increase in eq. price and decrease in eq. quantity

SC shifts left

37
Q

Wage effects _ and income effects _

A

Supply, demand

38
Q

What is absolute price?

A

Amount of money that must be spent to acquire one unit of that product

39
Q

What is relative price?

A

Price of one good in terms of another

Microeconomics (12 decks)

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