Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Econ 101 > Econ 101: Chapter 4 > Flashcards

Econ 101: Chapter 4 Flashcards

You may prefer our related Brainscape-certified flashcards:
Physics 101 flashcards Psychology 101 flashcards Chemistry 101 flashcards Biology 101 flashcards Organic Chemistry 101 flashcards Sociology 101 flashcards
1
Q

Planned economy

A

centralized decisions are made about what is produced, how, by whom, and who gets what

e.g. Cuba, the USSR

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Market economy

A

each individual makes their own production and consumption decisions, buying and selling in markets

e.g. North America, Europe

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Market

A

a setting bringing together potential buyers and sellers.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Different types of markets…

A
  • ones have posted prices
  • others are auctions
  • some are financial market (traders buy and sell stock).
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Equilibrium

A

the point where there is no tendency for change.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Markets are in equilibrium when…

A

quantity supplied equals quantity demanded.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Equilibrium price

A

the price at which the market is at equilibrium.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Equilibrium quantity

A

the quantity demanded and supplied in equilibrium.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Market equilibrium is…

A

determined in equal measure by both supply and demand.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Shortage

A

when the quantity demanded exceeds the quantity supplied.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Surplus

A

when the quantity demanded is less than the quantity supplied.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Shortages lead to a…

A

rise in price (shortages occur when the price is below equilibrium)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Surpluses lead to a…

A

fall in price (surpluses occur when the price is above equilibrium).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Disequilibrium

A

symptoms of a market out of equilibrium – raises the “effective price”

  • also can see that same thing when there is a surplus – lowers the effective price.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Disequilibrium type 1:

A

Queuing: waiting for a spot in line. Raises price as you are now spending time.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Disequilibrium type 2:

A

Bundling of extras: buying something extra so you can get what you were after in the first place.

17
Q

Disequilibrium type 3:

A

Secondary market: buying from somewhere that is not the “official” market.

18
Q

Shifts in demand (causes)

A

PEPTIC.

19
Q

Increases in demand:

A

rightward curve shift – buy a larger quantity at each price.

New supply-demand equilibrium with increased price and quantity.

20
Q

Increases of demand (sellers):

A

sellers do not want to continue to supply at the old equilibrium price.

No price change would mean a shortage, so the price is driven up, providing incentive for the seller to supply more.

21
Q

Decrease in demand:

A

leftward curve shift – buy a smaller quantity at each price.

New supply-demand equilibrium at a decreased price and quantity.

22
Q

Decrease in demand (sellers)

A

Decrease in demand means that a surplus would result.

Prospect of a surplus drives price down, incentivizing sellers to supply less.

23
Q

Demand shifts causes

A

price and quantity to move in the same direction.

24
Q

Shifts in supply (cause)

A

I, POET

25
Q

Increase in supply:

A

rightward curve shift – increases the quantity sellers plan to sell at each price.

New supply-demand equilibrium at a increased quantity and decreased price.

26
Q

Increase in supply (buyers)

A

Sellers want to continue to sell at the old price, but buyers don’t demand any more.

This prospect of a surplus leads price to drop, incentivizing buyers to increase the quantity they demand.

27
Q

Decrease in supply:

A

leftward curve shift, decreases the quantity suppliers plan to sell at each price.

New supply-demand equilibrium at a decreased quantity and increased price.

28
Q

Decrease in supply (buyers)

A

Decreased supply would mean a shortage. This prospect drives price up.

This higher price incentivizes buyers to decrease the quantity they demand.

29
Q

Supply shifts cause

A

price and quantity to move in opposite directions.

30
Q

To predict market outcomes:

A
  1. Is supply or demand curve shifting (or both).
  2. Right shift or left shift?
  3. How do prices and quantities compare at the new equilibrium?
31
Q

Anything that changes marginal benefits for buyers…

A

shifts the demand curve.

32
Q

Anything that changes marginal costs for sellers…

A

shifts the supply curve.

33
Q

Increase in marginal benefits…

A

= increase in demand

34
Q

Increase in marginal costs…

A

= decrease in supply

35
Q

When both supply and demand curves shift…

A

look at each shift separately and add up the effects.

36
Q

The effect of two curve shifts…

A

depend on which curve shifts the most.

37
Q

Morning-evening method

A

think about the demand as shifting in the morning.

think about the supply as shifting in the evening.

38
Q

Market clearing

A

when supply equals demand

Econ 101 (16 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions