Chpt 2 Flashcards
Non price factors affecting demand?
Levels of disposable income, quantity supply of a substitute good, taste and preferance
What is a normal good?
where demand increases as income increases eg chocolate or bananaas
what is an inferior good?
as income increases demand decreases
What is the supply side of the market?
Supply represents the sellers or producers side of the market
What is supply?
The amount of a good or service that producers are willing and able to sell
what is cost of production?
Prices such as labour, capital and raw material
Why is there a movement on a supply curve?
Cause by a change in price
why is there a shift of the entire supply curve?
Caused by a change in a non-price factor
If the quantity supplied goes down and price goes up what does that refer to ?
Contraction
If price goes down and quantity supplied goes up what does that refer to?
Expansion
What is the substitute effect?
an increase in the price of a good x will cause consumers to switch to a relatively cheaper substitute, reducing the quantity demanded
What is the income effect?
an increase in the price of substitute goods x will cause a consumers real income
what are the factors affecting demand?
Consumer preference, whether a consumer likes or dislikes a good or service, is often influenced by advertising and marketing
The price of related goods will have what effect?
The price or substitute complement goods will have an effect on demand
what happens if the price is above equilibrium?
if the prices is above equalibrium price, then quantityu supplied> quantity demanded creating a surplus
what happens if the price is below market equalibrium?
if the price is below the equalibrium price, then quantity demanded>quantity supplid creating a shortage
what does an increase in supple cause ?
Equalibrium price goes down and quantity supplied increases
decrease in supply causes what?
equalibrium price i indeterminate and quantity supplied decreases
CHanges in supply, What is a movemnent on the graph?
A change in movement along the curve. A rise in prices increases wuantity supplied, while a fall in price decreases quantity supplied.
Changes in supply, what is a shift on a graph?
Increase or decreasing in supply are shifts of the entire curve, caused by a factor other than the price of the goal.
What are the two types of changes in supply
There is a movement along the supply curve and a shift oft of the entire supply curve.
What are reasons for an increase in supply?
An improvement in techonology, Deacrease in production costs.
why is there a movement in a demand graph
A change in price causes a movement along the curve e.g a rise in price decrease quantity demanded
What causes a shift on the demand graph?
Increase or decrease in demand are shifts at the entire curve, caused by a factor other than the price of the good.
What does a demand decrease + supply increase cause ?
price decreases, wuantity indeterminate, decrease ind demand, increase in supply
what does a decrease in demand and supply decrease cause ?
decrease in demand and supply, suplus and shortage, increase in effect on purpose
what effect on price and effect on quantity does this shift have increase demand and no change in supply.
increase on effect on price and effect on quantity increase
what effect on price and effect on quantity does this shift decrease in demand and change in supply
effect on price decrease, effect on quantity decrease
what effect on price and effect on quantity does this shift have increase in supply and no change in demand
deffect on price decrease, effect on quantity increase
what effect on price and effect on quantity does this shift have increase in demand and increase in supply
effect on price indeterminate and effect on quantity increase
what effect on price and effect on quantity does this shift have increase in demand and decrease in supply
effect on price increase effect on quantity indeterminate
what effect on price and effect on quantity does this shift havedecrease in demand and increase in supply
effect on price decrease and effect on quantity indeterminate
what effect on price and effect on quantity does this shift have decrease in demand and decrease supply indeterminate
effec on price indeterminate, effect on quantity decrease.
