Chapter 3 - Supply and Demand Flashcards
What is a market?
Any place where goods are bought and sold. Includes interaction of all buyers and sellers. exists when and where an EXCHANGE takes place
What is a barter?
DIRECT EXCHANGE of one good for another, without the use of money
Market transaction requires _______
supply and demans
Supply and demand mist include a __________-
ABILITY and WILLINGNESS to buy/sell specific quantities of a good at alternative prices at a given time period
Every market transaction involves a(n) ….?
EXCHANGE
What 2 things determine how much someone is willing to pay for something?
INCOME and OPPORTUNITY COST
What does the demand curve depict?
Describes the quantities of a good a consumer is willing and able to buy at alternative prices in a given time period
What is the term for a table showing demand?? What are the 2 columns?
demand schedule. Price and Quantity demanded
According to the law of demand, as price goes down, demand goes ______
up
What is on the x and y axis on a demand curve
Y: price
X: Quantity
Demand curve is a ______sloping curve
downward
Anything other than ____ will cause a shift in the demand curve
price
Rise in income would cause an expansion or shrinkage of the demand curve?
Expansion
Chicken contamination would cause a left or right shift in the demand curve?
left
Movement ALONG the demand curve occurs when there is a change in ____
price
Supply schedule shows ______ and ______
price and quantity supplied
As price goes up, quantity supplied goes _____
up
Supply curve is a ______ sloping curve
upwards
Lower cost of raising chicken would cause a left or right shift in supply curve?
right
on the SUPPLY AND DEMAND curve below equilibrium represents a ______
shortage. quantity demanded exceeds supply
Will the equilibrium point always remain constant?
NO
Change in the PRICE of a good always indicates…..?
Movement along the curve
What is a price ceiling and where does it appear on the SUPPLY AND DEMAND curve?
price ceiling = upper limit (maximum price) imposed on the price of a good or service. BELOW equilibrium on the graph
What are the 3 effects of having a price ceiling?
-increase in quantity demanded
-decrease in quantity supplied
-creates a market SHORTAGE
What is a price floor and where does it appear on the SUPPLY AND DEMAND graph?
price floor = lower limit (minimum price) imposed on the price of a good or service. Appears ABOVE equilibrium point
What are the 3 effects of price FLOORS
-increase in quantity supplied
-decrease in quantity demanded
-creates a market SURPLUS
