Demand & Supply// Price Changes in the Market Flashcards
Describes a consumer’s desire and willingness to pay a price for a specific good or service.
Demand.
Demand refers to the continuous flow of purchases made over a given period of time.
True.
When demand is greater than supply, price is pulled upward.
True- Shortage.
These are the two price regulations set by the government.
Price ceilings and price floors.
Maximum price; below MCP.
Price ceiling.
Refers to the inefficient distribution of goods and services in the free market.
Market Failure.
From MCP, both demand and supply proportionately increases due to non-price determinants.
D=S. Price remains the same.
From MCP, supply decreases due to non-price determinants, while demand remains the same.
D>S. Shortage. Price goes up.
From MCP, supply increases due to non-price determinants, while demand remains the same.
D
From MCP, demand decreases due to non-price determinants, while supply remains the same.
D
From MCP, demand increases due to non-price determinants, while supply remains the same.
D>S. Shortage. Price goes up.
When demand is less than supply, prices are pushed downward.
True- Surplus.
MCP stands for.
Marginal Cost Pricing.
Number of commodities buyers are willing and able to buy.
Quantity demanded.
Number of commodities buyers are willing but are not necessarily able to buy.
Potential demand.
The Law of Supply states that as price increases, quantity supplied also increases; as price decreases, quantity supplied also decreases.
True.
The number of commodities sellers are willing and able to sell at a given period of time.
Quantity supplies.
The total amount of a specific good or service that is available to consumers.
Supply.
Changes in demand due to non-price determinants refer to the movement along the demand curve.
False.
Changes in quantity demanded due to changes in price.
Movement along the demand curve.
Sums up the effect price changes have on consumer behavior.
Law of demand.
The law of demand states as price increases, quantity demanded decreases; as price decreases, quantity demanded increases.
True.
Summarizes the effect price changes have on producer behavior.
Law of Supply.
In the LAW OF SUPPLY, price only reacts to the number of people who are willing and able to sell the product.
False.
In the LAW OF DEMAND, price only reacts to the number of people who are willing and able to buy the product.
False.
The effect of both Demand Pull Inflation and Cost Push Inflation is the increase in price.
True.
The cause of cost push inflation is the increase in prices of inputs like labor, raw materials, etc.
True.
The cause of demand pull inflation is greater demand vis-a-vis supply.
True.
When demand is less than supply, shortage occurs.
False.
When demand is greater than supply, shortage occurs.
True.
Shift along the supply curve refers to the changes in quantity supplied due to changes in Price.
False.
Movement along the supply curve refers to the changes in supply due to non-price determinants.
False.
The Equilibrium Price is also known as the Market Clearing Price.
True.
Minimum price; above MCP.
Price floor.
Market power causes market failure.
True.
