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Applied Economics > Demand and Supply Part 1 > Flashcards

Demand and Supply Part 1 Flashcards

1
Q

relation showing the quantities of a good that consumers are willing and able to buy per period at various prices

A

Demand

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2
Q

demand of an individual consumer

A

Individual demand

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3
Q

sum of the individual demands of all consumers in the market.

A

market demand

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4
Q

the relationship between prices and the specific quantities demanded at each

A

demand schedule

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5
Q

curve or line showing the quantities of a particular good demanded at various prices during a given period, other things constant

A

demand curve

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6
Q

sum of the individual demand curves for all consumers in the market

A

market demand curve

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7
Q

amount demanded at a particular price

A

quantity demanded

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8
Q

the quantity of demanded products per period relates inversely to their price, other things constant

A

Law of Demand

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9
Q

product’s price changes demand due to people buying and consuming other substitute goods

A

substitution effect

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10
Q

product’s price changes a consumer’s real income or purchasing power (the capacity to buy within a given income).

A

income effect

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11
Q

change in total economic utility (or simply utility) resulting from a one-unit change (meaning buying more than one) when you consume a product or service

A

Marginal utility

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12
Q

amount of satisfaction a consumer receives from the consumption of a product or service.

A

Economic utility

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13
Q

the more of the product or service an individual consumes per period, other things constant (ceteris paribus), the smaller the marginal utility of each additional unit consumed.

A

Law of Diminishing Marginal Utility

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14
Q

2 examples of applications of Diminishing Marginal Utility:

A
  1. Restaurants that have all-you-can-eat specials
  2. Having a second copy of today’s newspaper
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15
Q

the relationship between the demand for a commodity and the factors (product’s price, prices of related products, level of income, taste, preferences, etc.) that determine or influence this demand

A

demand function

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16
Q

formula for finding the demand function

A

QD = a – bP

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17
Q

If there is a movement from one point to another (or from one price-quantity combination to another) along the same demand curve, there is a _________

A

change in quantity demanded (∆QD)

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18
Q

When an entire demand curve shifts leftward or rightward, there is a ________

A

change in demand

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19
Q

What are the 6 factors/forces that cause changes to the demand curves?

A

1.Taste or Preference
2.Changing Incomes
3.Population Change
4.Occasional or Seasonal Products
5.Substitute and Complementary Goods
6.Expectations of Future Prices

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20
Q

consumers’ personal likes or dislikes for certain goods and services.

A

Taste or Preference

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21
Q

An increase in one’s income increases an individual’s capacity or power to demand products or services that they cannot buy due to having a lower income.

A

Changing Incomes

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22
Q

What are the 2 broad categories vary on how demand for the good is responding to changes in income?

A
  1. normal goods
  2. inferior goods
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23
Q

Where there is an increase in income, there is an increase in the demand for _________

A

normal goods

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23
Q

When there is an increase in income, there is a decrease in demand ________

A

inferior goods

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24
Q

examples of inferior goods

A

Ukay-ukay clothing
Jeepney rides
Secondhand furniture

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25
Q

examples of normal goods

A

New clothes
Car
Plane rides
New furniture

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26
Q

An increase in the demand for some goods or services, particularly for basic goods, results from an increasing population

A

Population Change

27
Q

Various events and seasons within the year may cause a movement on the demand curve for specific goods

A

Occasional or Seasonal Products

28
Q

interchanged with another good, usually offered at a lower price, thus making them more attractive to customers

A

Substitute and Complementary Goods

29
Q

If customers expect the price of a product or service to increase (or decrease) in the future, it may lead to an increase (or decrease) in current demand

A

Expectations of Future Prices

30
Q

a relation showing the quantities of goods producers are willing and able to sell at various prices at a given period, and other things are held constant

A

Supply

31
Q

the supply of an individual producer

A

Individual supply

31
Q

supply from all producers in the market for that good.

A

market supply

32
Q

table listing the various prices of a product and the specific quantities supplied at each of these prices at a given time

A

supply schedule

33
Q

curve or line showing the quantities of a particular good supplied at various prices during a given period and other things held constant

A

supply curve

34
Q

shows the total quantities of all producers at various prices

A

market supply curve

35
Q

the amount offered for sale at a specific price, as shown by the point on the given supply curve.

A

quantity supplied

36
Q

states that the quantity of product supplied during a period is usually directly related to its price, other things constant

A

Law of Supply

37
Q

mathematical notation that links the dependent variable, quantity supplied (QS), with various independent variables that determine quantity supplied.

A

supply function

38
Q

formula for supply function

A

QS = c + dP

39
Q

If there is movement from one point to another along the same supply curve, there is a _________

A

change in quantity supplied (∆QS)

40
Q

What are the 6 forces/independent variaibles that cause changes to the supply curve?

A
  1. Optimization in the Use of Factors of Production
  2. Technological Change
  3. Future Expectations
  4. Number of Sellers
  5. Weather Conditions
  6. Government Policies
41
Q

An increase in supply will happen when there is an optimization of the utilization of production factors (economic resources)

A

Optimization in the Use of Factors of Production

42
Q

There is an increase in the supply brought by the introduction of cost-reducing innovations.

A

Technological Change

43
Q

These can impact not just buyers but also sellers

A

Future Expectations

44
Q

A greater supply of products and services will be available if more sellers are in the market – such a variable directly impacts the quantity supplied.

A

Number of Sellers

45
Q

There is a reduction in the supply of agricultural commodities during natural disasters

A

Weather Conditions

46
Q

When quotas and tariffs on imported products are removed, there is an effect on the supply, and when restrictions and quotas or tariffs are lowered, there is a boost in the supply of goods in the market due to imports

A

Government Policies

47
Q

when the quantity consumers are willing and able to buy equals the quantity producers are willing and able to sell.

A

Market equilibrium

48
Q

equates quantity demanded with quantity supplied

A

Equilibrium price (market-clearing price)

49
Q

a mismatch between the quantity demanded and quantity supplied as the market seeks equilibrium

A

Disequilibrium (Market Disequilibrium)

50
Q

the difference between what consumers are willing and able to pay for a given quantity of a good and what they pay

A

Consumer surplus

51
Q

As supply remains constant, an increase (or decrease) in demand increases (or decreases) both equilibrium price and quantity.

A

Changes in Demand

52
Q

If there is an increase (or decrease) in supply, as demand remains constant, it will decrease (or increase) in the equilibrium price and increase (or decrease) in the number of goods sold in the market

A

Changes in Supply

53
Q

The changes in both supply and demand result in a combination of individual changes

A

Complex Cases

54
Q

When there is an increase in supply and a decrease in demand

A

Both equilibrium quantity and equilibrium price will fall: S’ < D’.

The equilibrium quantity will rise, and the equilibrium price will fall: S’ > D’.

55
Q

When there is a decrease in supply, and there is an increase in demand

A

The equilibrium quantity will fall, and the equilibrium price will rise: S’ > D’.

Both equilibrium quantity and equilibrium price will rise: S’ < D’.

56
Q

When there is an increase in both supply and demand

A

The equilibrium quantity will rise, and the equilibrium price will fall: S’ > D’.

Both equilibrium quantity and equilibrium price will rise: S’ < D’.

57
Q

When there is a decrease in both supply and demand

A

Both equilibrium quantity and equilibrium price will fall: S’ < D’.

The equilibrium quantity will fall, and the equilibrium price will rise:
S’ > D’.

58
Q

the government’s specification of minimum or maximum prices for certain goods and services when the government considers existing prices disadvantageous to the producer or consumer.

A

Price controls

59
Q

2 types of price control

A
  1. price floor
  2. price ceiling
60
Q

a legal minimum price below which a product cannot be sold

A

price floor(floor price)

61
Q

a legal maximum selling price above which a product cannot be sold.

A

price ceiling

62
Q

in the market – producers are taking advantage of the consumers since they are selling their products at higher prices in illegal/black markets, and consumers are left with no option but to purchase products at a price higher than the price ceiling.

A

shortage

63
Q

states that price decreases when supply is greater than demand and increases when demand is greater than supply

A

Law of Supply and Demand

Applied Economics (10 decks)

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