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Econ 104 > ECON ch 3- EXAM#1 > Flashcards

ECON ch 3- EXAM#1 Flashcards

1
Q

in a perfect competitive market everyone is

A

a price taker

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2
Q

what type of market sells a homogenous good with many buyers and sellers, and with no market power

A

competitive market

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3
Q

the markets in which goods and services are exchanged

A

output markets (G&S markets)

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4
Q

the markets in which resources (labor, capital, land) are exchanged

  • households
  • entrepreneurships
A

input markets (factor markets)

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5
Q

the market in which households supply work for wages to firms that demand labor

A

labor market (input)

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6
Q

the market in which households supply their savings, for interest or for future profits, to firms that demand funds to buy capital goods

A

the financial- capital market (input)

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7
Q

households play 2 roles

A
  1. consuming units (buyers) in the markets for outputs

2. supplying units in the market for inputs (labor)

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8
Q

organizations that transforms resources (inputs) into goods and services (outputs)

A

business firms

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9
Q

firms play 2 roles

A
  1. consuming units in the market for inputs

2. supplying units in the market for outputs

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10
Q

demand shifters (5)

A
  • income
  • population (# of buyers)
  • preferences
  • prices of compliments/substitutes
  • expectations
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11
Q

law of demand

A

the theory according to which the QD of a good falls when the P of a good rises

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12
Q

shifters are also known as

A

non-price determinants

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13
Q

“other things equal” =

A

= “ceteris paribus”

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14
Q

a table showing the relationship between the price and the QD of the analyzed goods (lattes)

A

demand schedule

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15
Q

are movements along the demand curve caused by a change in the price of the analyzed good.
changes in what

A

changes in the QD

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16
Q

a shift of the demand curve caused by changes in shifters (income, price of related goods, expectations)
changes in what

A

changes in demand

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17
Q

demand curve shifters

-shift to right

A

increases

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18
Q

demand curve shifters

-shift to the left

A

decreases

19
Q

normal goods

A

are goods for which demand increases (right shift) when income goes up (and for which demand decreases when income goes down)

20
Q

inferior goods

A

are goods for which demand decreases (left shift) when income goes up (and for which demand increases when income goes up)

21
Q

demand for normal increases

A

income increases

22
Q

demand for inferiors decreases

A

income increases

23
Q

substitutes: when price increases, demand

A

demand increases

24
Q

compliments: when price increases, demand

A

demand decreases

25
Q

anything that causes a shift in tastes toward a good will increase demand for that good and shifts its demand curve to the right

A

preferences

26
Q

affect consumers` buying decisions

A

expectations

27
Q

price causes

A

price causes a movement along the same demand (only QD changes)

28
Q

shifts the demand curve (5)

A

income, population, price of related GS, tastes, expectations

29
Q

determinants of supply curve (5)

A
  • price of the analyzed GS
  • the cost of producing the good, which in turn, depends on price of inputs
  • technology
  • # of firms producing and selling the GS
  • expectations
30
Q

law of supply

A

the theory according to which the QS of a good increases when the price of the good rises

31
Q

an increase in the # of sellers increases the QS at each price, shifts the supply curve to

A

to the right

32
Q

the tendency in a free market for the price to change until the market clears (reaches equilibrium)

A

the market mechanism

33
Q

QS=QD

A

equilibrium

34
Q

two types of market disequilibria

A
  1. excess demand (shortage)

2. excess supply (surplus)

35
Q

when QS is greater than QD

A

surplus

36
Q

when QD is greater than QS

A

shortage

37
Q

a change in demand:

price goes up

A

demand increases

  • quantity goes up
  • price goes up
38
Q

a change in supply:

technology improves

A

produce more, so P goes down and Q goes up

39
Q

demand decreases

A

P and Q decreases (shift left)

40
Q

supply increases

A

P decreases and Q increases (shift right)

41
Q

demand increases

A

P and Q increases (shift right)

42
Q

supply decreases

A

P increases and Q decreases (shift left)

43
Q

demand decreases and supply increases

A

P decreases and Q either

44
Q

demand increases and supply decreases

A

P increases and Q either

Econ 104 (15 decks)

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