Chapter 4 Flashcards
The buildings and physical improvements, machines, and tools that business use to produce goods and services
Capital
Goods that are used together. When the price of one good increases, the demand for its ____ decreases.
complementary good
A table or graph showing the quantity of a good demanded at each price, assuming that all possible influencing factors other than price remain constant.
demand
The price at which quantity supplied is equal to quantity demanded
equilibrium price
The quantity of a good bought and sold when quantity supplied equals quantity demanded
equilibrium quantity
A market is in ___ when the quantity demanded equals the quantity supplied.
equilibrium
A good is ___ if in response to an increase in income, individuals decrease their consumption of the good.
inferior
The resources - labor, land, and capital - businesses use in producing goods and services. Those resources are often described as factors of production.
inputs
The principle that price and quantity demanded are inversely related. A decrease in price, assuming nothing else changes, will cause an increase in the quantity demanded and an increase in price will cause a decrease in the quantity demanded
law of demand
The market price and the quantity exchanged in a perfectly competitive market will move toward the price and quantity where quantity supplied is equal to quantity demanded.
law of supply and demand
A change in quantity demanded caused by a change in a good’s price.
Movements along a demand curve
A change in quantity supplied caused by a change in a good’s price.
Movements along a supply curve
A good is ___ if in response to an increase in income, individuals increase their consumption of the good.
normal
The quantity of a good or service that consumers intend to purchase throughout a given time period at a certain price.
quantity demanded
The quantity of a good or service that producers intend to sell throughout a given time period at a certain price.
quantity supplied
A change in the quantities consumers are willing and able to purchase at each price. The shift is caused by changes other than a change in price. For instance, changes in income, tastes, expectations, the number of potential buyers, and prices of substitute and complementary goods
Shift in the demand curve
A change in the quantities producers are willing and able to sell at each price. The shift is caused by changes other than a change in price. For instance, rising labor costs
shift in the supply curve
At a single price, the quantity demanded is greater than the quantity supplied.
shortage
Goods that can used in place of one another. When the price of one increases, the demand for a ____ good increases.
substitute
A table (schedule) or graph (curve) showing the quantity of a good that producers are willing to supply at each price, assuming that all possible influencing factors other than price remain constant.
supply
At a single price, the quantity supplied is greater than the quantity demanded.
surplus
A “movement along a demand curve” is caused by ____. A “shift in the demand curve” is caused by ____.
change of price of the good; the other factors (taste, preference, income)
An increase in demand will cause the equilibrium price and quantity to ___. A decrease in demand will cause the equilibrium price and quantity to ___.
increase; increase
An increase in supply will cause the equilibrium price to ____ and the equilibrium quantity to ____. A decrease in supply will cause the equilibrium price to ____ and the equilibrium quantity to ____.
decrease; increase
increase; decrease
Normal supply and demand implies that as price falls below equilibrium, the quantity demanded ____ and the quantity supplied ____. There is now a ____.
increases; decreases; shortage
An increase in the prices of inputs will cause the equilibrium price to ______ and the equilibrium quantity to ______.
increase; decrease
What happens to equilibrium price and quantity if the number of consumers increases?
Price increases; quantity decreases
What is the name of the simple model where you can assume all other possible determinants do not change, there is only a change in price?
Ceteris-paribus
A change in price changes ____. It does NOT change ____.
quantity demanded; demand
