Chapter 4: Market Forces Of Supply And Demand

Question 1

2 important words in economics

Answer 1

Supply and demand

Question 2

Market

Answer 2

Group of buyers and sellers of a particular good / service

Question 3

Buyers as a group determine the ____ for a product

Sellers as a group determine the ______ of product

Answer 3

Buyers = demand
Sellers = supply

Question 4

Competitive market

Answer 4

Market with many buyers and sellers that one person doesn’t affect the market

If I stop going to 7-11 it won’t shut down or change its price

Question 5

All markets we look at will be ____________

Answer 5

Perfect competitive

Question 6

Quantity demanded

Answer 6

Amount of a good that buyers are willing and able to purchase

Question 7

Law of demand

Answer 7

When prices go up, demand goes down

When prices go down, demand goes up

We all want a tv for cheap!!

Question 8

Demand schedule is a _____ that shows the relationship between the price of a good and the quantity demanded

A demand curve shows the relationship in _____ form

Answer 8

Table

Graph

Question 9

Market demand

Answer 9

The sum of all the individual demand for a particular good / service

Question 10

Increase in demand = a shift to the ______

A decrease in demand = a shift to the ______

Answer 10

Right

Left

Question 11

Normal good

Answer 11

An increase of income = an increase in demand

Chocolate bars, clothes,

Question 12

Inferior goods

Answer 12

An increase in income = decrease in demand

More money = less buying of fake brands

Question 13

Things that shift the demand curve

Answer 13

1) income
2) price of related goods (is coffee cheaper than red bull?)
3) tastes (whats today’s fad?)
4) expectations (prices go up in future, buy now)
5) number of buyers

Question 14

Substitutes

Answer 14

Coffee to red bull

Buying more of one leads to less of the other

Question 15

Complements

Answer 15

Things bought together

Fries and burgers, buns and hotdogs

Question 16

Quantity supplied

Answer 16

Amount of a good that sellers are willing and able to sell at

Question 17

Law of supply

Answer 17

The quantity supplied goes up when prices of the item goes up

Question 18

Supply schedule:

Supply curve:

Answer 18

Table (price of good and quantity supplied)

Graph (price of good and quantity supplied)

Question 19

Market supply

Answer 19

Sum of suppliers of all sellers

Question 20

Shift to the right =

Shift to the left =

Answer 20

Increase in supply

Decrease in supply

Question 21

4 factors that affect the supply curve

Answer 21

Input prices: price of attenas increases, less supply
Technology: + tech = more supplies
Expectations = price higher in future? Less supply
Number of sellers = more supplies

Question 22

Equilibrium

Answer 22

Where quantity = price and vice versa

Question 23

Surplus

Answer 23

Quantity supplied is greater than quantity demanded

Question 24

Shortage

Answer 24

Quantity demanded is greater than quantity supplied

Question 25

You see this card? Look at what happens when both supply and demand change. What the fuck did Karl do!

Answer 25

Look at how the small change and big change affect things