Econ 100 Flashcards
What is a change in demand?
When a change in some economic factor (other than price) causes a different quantity to be demanded at every price.
This concept reflects shifts in the demand curve due to factors like consumer preferences or income changes.
What does a change in quantity demanded refer to?
When the price of a good or service changes and it induces a change in the amount of the good or service being demanded; a movement along a demand curve.
This is illustrated by movements along the same demand curve.
Define change in quantity supplied.
When the price of a good or service changes and it induces a change in the amount of the good or service being supplied; a movement along a supply curve.
This reflects the direct relationship between price changes and supply levels.
What is a change in supply?
When a change in some economic factor (other than price) causes a different quantity to be supplied at every price.
This leads to shifts in the supply curve due to factors like production costs or technology.
What are complements in economics?
Goods that are often used together so that consumption of one good tends to enhance consumption of the other.
Examples include printers and ink cartridges.
What are demand shifters?
A change in an economic factor that is not the price, this creates a change in demand.
Factors include changes in consumer income, preferences, or the prices of related goods.
Define elasticity in economics.
An economics concept that measures responsiveness of one variable to changes in another variable.
Commonly used to analyze demand and supply reactions to price changes.
What is equilibrium price?
The price where quantity demanded is equal to quantity supplied.
This point reflects a balance in the market.
What is equilibrium quantity?
The quantity at which quantity demanded and quantity supplied are equal for a certain price level.
This is the quantity that clears the market.
What does inelastic mean?
When the percentage change in quantity is less than the percentage change in the price of the good or service.
Inelastic goods have a demand that is not very responsive to price changes.
Define inferior goods.
A good in which the quantity demanded falls as income rises, and in which quantity demanded rises and income falls.
Examples include generic brands or low-cost substitutes.
What is the law of demand?
The common relationship that a higher price leads to a lower quantity demanded of a certain good or service and a lower price leads to a higher quantity demanded, while all other variables are held constant.
This fundamental principle illustrates consumer behavior.
What is the law of supply?
The common relationship that a higher price leads to a greater quantity supplied and a lower price leads to a lower quantity supplied, while all other variables are held constant.
This principle reflects producer behavior in the market.
Define normal goods.
A good in which the quantity demanded rises as income rises, and in which quantity demanded falls as income falls.
Examples include luxury items and branded products.
What is the price elasticity of demand?
Percentage change in the quantity demanded of a good or service divided by the percentage change in price.
This measure indicates how sensitive consumers are to price changes.
What are substitutes?
A good that can replace another to some extent, so that greater consumption of one good can mean less of the other.
Examples include butter and margarine.
What are supply shifters?
A change in an economic factor that is not the price, this creates a change in supply.
Factors include production costs, technology, and number of suppliers.
What is total revenue for elasticity of demand?
A test that demonstrates the relationship between total revenue and the price elasticity of demand.
It helps in understanding how price changes affect overall sales revenue.
