Chapter One Flashcards
Quantity demanded
The amount of a good that a given individual or group of individuals will choose to consume at a given price.
Law of demand
The observation that when the price of a good goes up,people will buy less of that good.
However, all else must be equal.
Demand
A family of numbers that lists the quantity demanded corresponding to each possible price.
Demand
A family of numbers that lists the quantity demanded corresponding to each possible price.
Demand curve
A graph illustrating demand, with prices on the vertical axis and quantities demanded on the horizontal axis.
A change in price leads to a change in quantity demanded. A change in price _______ ______ lead to change in demand.
Does not
When price goes up, the quantity demanded goes down. Slope curves:
Downward.
Fall in demand
A decision by demanders to buy a smaller quantity at each given price.
Rise in demand
A decision by demanders to buy a larger quantity at each given price.
A change in anything other than _______ leads to change in demand.
Price.
A sales tax causes demand curve to shift _________ parallel to itself by the amount of the tax.
Downward
Econometrics
A family of statistical techniques used by economics.
Law of supply
The observation that when the price of a good goes up, the quantity supplies goes up.
Quantity supplied
The amount of a good that suppliers will provide at a given price.
Supply
A family of numbers giving the quantities supplied at each possible price.
Rise in supply
An increase in the quantities that suppliers will provide at each given Price.
Fall in supply
A decrease in the quantities that suppliers will provide at each given price.
Excise tax
A tax that is paid directly by suppliers to the government.
An excise tax causes the supply curve to shift _____ parallel to itself ( to a new lower supply curve) by the amount of tax.
Upward
Equilibrium point
The point where the supply and demand curves intersect.
Satisfied
Able to behave as one wants to, taking market prices as given.
Price to demanders
Price plus sales tax.
Price to suppliers
Price minus excise tax.
Economic incidence
The division of a tax burden according to who actually pays the tax.
Legal incidence
The division of a tax burden according to who is required under the law to pay the tax.
