Chapter 4 Flashcards
What is a capitalist economy?
An economy where resources are generally owned by private individuals who have the power to decide how the resources are allocated
What is a command socialist Economy?
An economy where land and capital are primarily owned by the government who has the authority to decide the use of all the factors of production
What is a mixed economy?
An economy where private individuals and the government is involved in the process of making decisions about how resources or factory production are used. This economy has elements of both capital economy and command socialist.
What is a market?
Any institution that brings buyers and sellers together for the purpose of trade.
What does demand mean?
The willingness and ability to buy a good or service at a particular price and time. This is also know as effective demand.
What is Quantity demanded?
This is the amount of a good or service an individual is willing and able to purchase at a particular price and time; all other things equal
What is a demand schedule?
A table showing the various amounts of a good or service that an individual is willing and able to pay at a particular price and time.
What is the demand curve?
A graphical representation of the demand schedule. This graph shows the various amounts of goods and services that an individual is willing to buy at a particular price and time.
Wha tis the change in quantity demand?
Movement along the demand curve caused by a change in price of the good or service itself. It depicts the law of demand.
What is the law of demand?
All other things equal other things constant. The higher the price the lower the quantity demand and the lower the price the hight the quantity demand.
What is the subsitution effect?
Change in the price of a good makes it relatively cheaper or more expensive compared to other goods? Taking something from one good and moving it to the other good.
What is income effect?
change in the price of a good may increase or decrease the purchasing power of a buyer or consumer.
what is change in demand?
This is a shift in the demand curce to the right or left it is the result of change in other factors affecting demand other than the price of the good or service itself.
What are five factors (shifters) causing change in demand?
Income Taste and preference expectation of future prices poplulation and demographics price of related goods
what is a normal good?
thsi is a good for which increase in income results in an increase in its demand
