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Macroeconomics > Chapter 3: Supply, Demand, & Market Equilibrium > Flashcards

Chapter 3: Supply, Demand, & Market Equilibrium Flashcards

1
Q

Law of demand

A

Price up quantity demanded down

Price down quantity demanded up

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2
Q

Law of supply

A

Price up quantity supplied up

Price down quantity supplied down

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3
Q

5 things held constant while building a demand curve

A
  1. Income
  2. Wealth
  3. Prices of other goods
  4. Tastes and preferences
  5. Expectations
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4
Q

3 things held constant while building a supply curve

A
  1. State of technology
  2. Cost of inputs
  3. Price of other goods
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5
Q

Movement along demand/supply curve

A

Movement = Change in QUANTITY demanded/supplied

Factors include: Change in price

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6
Q

Shift of demand curve

A 
Shift = Change in demand
Factors include changes in...
1. Income
2. Wealth
3. Prices of other goods
4. Tastes and preferences
5. Expectations
(When factors other than price change)
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7
Q

Shift of supply curve

A 
Shift = Change in supply
Factors include changes in...
1. State of technology
2. Cost of inputs
3. Price of other goods
(When factors other than price change)
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8
Q

Normal good

A

Income up, demand up, price up, quantity supplied up
Income down, demand down, price down, quantity supplied down
(Change in demand = Shift of demand curve)

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9
Q

Inferior good

A

Income up, demand down, price down, quantity supplied down
Income down, demand up, price up, quantity supplied up
(Change in demand = Shift of demand curve)

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10
Q

Substitute

A

Price of one up the demand for substitute up price of substitute up
Price of one down the demand for substitute down price of substitute down
(Change in demand = Shift of demand curve)

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11
Q

Complement

A

Price of one up demand for other down price of complement down
Price of one down demand for other up price of complement up
(Change in demand = Shift of demand curve)

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12
Q

Equilibrium price/market clearing price

A

Quantity demanded = quantity supplied

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13
Q

Surplus/excess supply

A

Quantity supplied > quantity demanded

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14
Q

Shortage/excess demand

A

Quantity demanded > quantity supplied

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15
Q

Increase in equilibrium quantity

A

Demand up

Supply up

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16
Q

Decrease in equilibrium quantity

A

Demand down

Supply down

17
Q

Increase in equilibrium price

A

Demand up

Supply down

18
Q

Decrease in equilibrium price

A

Demand down

Supply up

19
Q

Market demand

A

Sum of all quantities of a good or service demanded per period by all the households buying the good or service

20
Q

Market demand/supply curve

A

Sum of all the individual demand/supply curves for a product. At a given price, the total quantity demanded or supplied is calculated.

Macroeconomics (9 decks)

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