Chapter 3 - Supply and Demand Flashcards
What is a competitive market
When there are many buyers and sellers of the same good and service, none of whom can influence the price
What is the demand curve
It shows the quantity demanded at various prices
What is a demand schedule
Shows how much of a good or service customers will want to buy at different prices
Which ways does the demand curve shift during a) an increase and b) a decrease
A) it shifts rightward
B) it shifts leftward
What is the difference between a movement and a shift in the demand curve
When price alone changes there’s is movement. When the demand shifts (people buying more or less) at every price
What are the five factors that shift the demand curve
- Changes in prices of related goods or services
- Changes in income
- Changes in tastes
- Changes in expectations
- Changes in the number of consumers
What is a substitute
If a decrease in the price of one good leads to a decrease in demand for the other
What are complements
When a decrease in price of one good leads to an increase in demand for the other
What does supply represent
The behaviour of sellers
What is a supply schedule
Shows how much of a good or service would be supplied at different prices
What is a supply curve
Shows the quantity supplied at various prices
What is quantity supplied
The quantity that producers are willing and able to sell at a particular price
What is the difference between movement along the supply curve and a shift
Movement is a change in the quantity supplied of a good that is the result of a change in the goods price
Which way does the supply curve shift in an a) increase and b) decrease
A) rightward shift is an increase in supply
B) leftward shift is a decrease in supply
What five factors shift the supply curve
- Input prices
- The prices of related goods or services
- Technology
- Expectations
- The number of producers
