demand supply and market equilibrium Flashcards
Law of supply
as price increases the quantity supplied increase in a direct relationship.
Contraction of supply:
if market prices fall, we expect to see a contraction of supply and therefore a lesser quantity to be supplied
Extension of demand
a decrease in price causes there to be an extension along the demand curve and therefore a greater quantity to be demanded
Contraction of demand
a increase in price causes a contraction along the demand curve and therefore a lesser quantity to be demanded
Demand
the amount of goods or services that consumers are willing and able to buy at a given time
Complements
A good that adds value to another; as consumer demand more of one they demand more of the other- frequently brought together
Substitutes
two goods that are used for the same purpose; as consumers demand more of one, they less of the other
Market equilibrium
a situation that occurs in a market when the price is such that the quantity that consumers wish to buy is exactly balacendd by the quantity that firms wish to supply
factors that cause the supply curve to shift
Productivity Indirtect taxes New producers Taxes Subsidies Weather
factors that cause the demand curve to shift
Population D1 will shift right Adverstiment Dq shift left to D2 Subsite good Income D1 shifts right to D2 Fashion Interest rate Complements
Supply
is the quantity of a good or service that a producer is willing and able to supply onto the market at a given price in a given time perio
Economic Costs of production
value that could have been generated had the resources been employed in their next best use
what is sira
Allocate scare resources
Rations
Signal to producer
Incentive to change price to make profit
what order for sira
Signal to producer
Incentive to change price to make profit
Rations
Allocate scare resources
what does excess demand cost
upward pressure
