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Basic Microeconomics > Chapter 3: Law of Demand and Supply > Flashcards

Chapter 3: Law of Demand and Supply Flashcards

1
Q

refers to the quantity of a product, item, commodity, or service that suppliers are willing to make available at a given price.

A

Supply

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2
Q

refers to the quantity of a product, item, commodity, or service that consumers are willing and able to acquire available at a given price.

A

Demand

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3
Q

The blank is one of the most fundamental economic laws that are blank to practical ideas.

A

law of supply and demand

inextricably linked

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4
Q

A group of buyers and sellers of a particular good or service.

A

Market

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5
Q

A market in which there are many buyers and many sellers so that each has a negligible impact on the market price.

A

Competitive Market

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6
Q

A market that has only one seller

A

Monopoly

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7
Q

The amount of good that buyers are willing and able to buy at a certain price level

A

Quantity Demanded

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8
Q

The result of the Law of demand: individuals would blank a commodity that requires them to blank of another item they value more.

A

naturally avoid purchasing

forego the consumption

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9
Q

The claim that other things being equal, the quantity demanded of a good falls when the price rises, and vice versa.

A

Law of demand

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10
Q

A table in economics that depicts the quantity demanded on an item or service at various price levels.

A

Demand Schedule

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11
Q

A graph of the relationship between the price of a good and the quantity demanded

A

Demand Curve

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12
Q

Sum of individual demand curves

A

Market demand

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13
Q

Determinants of Demand that shifts the demand curve

A
  • Consumer’s Income
  • Consumer’s Expectations of Future Prices
  • Prices of Related Products
  • Consumer’s Taste and Preference
  • Population
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14
Q

How does consumers’ income affect demand?

A

Because your income dictates the way you spend your money

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15
Q

demand increase when income increases and vice versa, the good is called?

A

normal goods

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16
Q

demand falls when income rises and vice versa, the good is called?

A

inferior goods

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17
Q

Example of normal goods

A

Basic necessities such as rice, utilities, medical and dental services

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18
Q

Example of inferior goods

A

A lower income person chooses public transportation than acquiring cars, and if a person has a higher income, he tends to buy cars rather than choosing public transportation.

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19
Q

How does Consumer’s Expectations of Future Prices affect demand?

A

Expecting prices in future periods affect the way we spend currently, therefore, affecting the demand

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20
Q

Example of Consumers’ Expectations

A

increase on the price of gasoline in the future causes panic-buying for car owners to maximize their purchasing power.

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21
Q

How do Prices of Related Products affect demand?

A

Demand for a particular good will change the demand for related goods

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22
Q

Types of Related Products according to availability

A

Substitute

Complimentary

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23
Q

two goods for which an increase in the price of one leads to an increase in the demand of the other,
Goods used in place for other goods

A

Substitute

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24
Q

two goods for which an increase in the price of one leads to a decrease in the demand of the other,
Goods that cannot be used without the other

A

Complimentary

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25
Q

Example of Substitute

A

Frozen Yogurt and Ice cream

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26
Q

Example of Complements

A

Gasoline and Automobiles

27
Q

The most obvious determinant of demand

A

Consumer’s Taste and Preference

28
Q

How do Consumers’ Tastes and Preferences affect demand?

A

Because an inclination toward a good affects demand

29
Q

Determinant of demand that is affected by religion, culture, age, traditions, trend, technology, and other historical and psychological forces.

A

Consumer’s Taste and Preference

30
Q

How does Population affect demand?

A

An increase in population also increases the demand because there will be another addition to the market demand.

31
Q

The mathematical representation of the relationship between the quantity good sought and the factors that affect the consumers’ willingness and capacity to purchase the good.

A

Demand Function

32
Q

Demand Function

A

Qd=f(P,Prg,Y)
Qxt=f(Pxt,Yt,Prt,P^e(x,t+i),T)
Qdx = a - bPx

33
Q

The variables in the right are being held blank as the demand curve is plotted

A

constant

34
Q

If it is a compliment, its price coefficient will be blank. If it is a substitute, its price coefficient will be blank.

A

negative

positive

35
Q

The coefficient of income is positive indicate that it is blank. If the coefficient is negative, the good is blank.

A

normal good

inferior good

36
Q

Blank is driven by demand.

A

Economic growth

37
Q

Governments and central banks stimulate demand in order to bring blank to an end.

A

recessions

38
Q

However, economics simplifies the equation to emphasize the blank of individual demand and the sixth factor of blank.

A

five key drivers

aggregate demand

39
Q

the number of goods or services that suppliers are willing to produce at a given market price.

A

quantity supplied

40
Q

The claim that, other things being equal, the quantity supplied of a good rises when the price of the good rises.

A

Law of Supply

41
Q

a table that shows the relationship between the price of a good and the quantity supplied

A

Supply Schedule

42
Q

A graph of the relationship between the price of a good and the quantity supplied

A

Supply Curve

43
Q

The sum of the supplies of all sellers.

A

Market Supply

44
Q

Determinants of supply that shifts the supply curve

A

Input Prices, Technology, Expectations, Number of Sellers, Government Regulations (Tax, subsidies, and policies)

45
Q

How do Input Prices affect supply?

A

Increases in the price of the raw materials in order to produce outputs affect the ability of a firm to produce.

46
Q

How does Technology affect supply?

A

Technological advancements could reduce firms’ costs and could produce more outputs.

47
Q

How do Expectations affect supply?

A

Increase in future price could make producers manufacture less in the current period and produce more at a future period.

48
Q

How does Number of Sellers affect supply?

A

An increase in the number of sellers means that the supply will increase in the market and if the number of sellers decreases it will prove otherwise.

49
Q

How do Government regulations (Tax, subsidies, and policies) affect supply?

A

Taxes and regulations hinder firms to produce more outputs and subsidies encourages firms to produce more.

50
Q

a situation in which the market price has reached the level at which quantity supplied equals quantity demanded

A

Market equilibrium

51
Q

A mathematical representation of the relationship between the quantity of a service or product required, its price and other associated factors.

A

Supply Function

52
Q

Supply Function

A 
Qsx = f(P_x,T,C,Exp,Grt,Gs,M)
Qsx = f(Px)
Qsx = -c + dPx
53
Q

The supply of a good is blank to the prices of inputs used to make the good.

A

Negatively related

54
Q

Machinery or other technologies reduce what?

A

Cost and Labor

55
Q

Change in Demand

A

Shifts demand curve to another.

56
Q

Changes in Quantity Demand

A

Movement along the curve as other remain variables remain constant.

57
Q

The degree to which the quantity fluctuates in response to variations in price is called?

A

Demand Elasticity

58
Q

Change in Supply

A

Shifts supply curve to another.

59
Q

Changes in Quantity Supplied

A

Movement along the supply curve as other variables remain constant.

60
Q

A situation in which quantity supplied is greater than quantity demanded.

A

Surplus

61
Q

Also called excess supply

A

Surplus

62
Q

A situation in which quantity demanded is greater than quantity supplied.

A

Shortage

63
Q

Also called excess demand

A

Shortage

64
Q

The claim that the price of any good adjusts to bring the quantity supplied and the quantity demanded that good into balance

A

Law of supply and demand

Basic Microeconomics (8 decks)

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