ECON Lesson 3 Flashcards
What are the two primary forces in market analysis?
Buyers and Sellers
These forces agree on the use of the available resources.
Willingness and capacity of producer/supplier to supply or sell quantity of goods or services at various possible prices.
Supply
Willingness and capacity of individuals to pay or purchase a quantity of goods or services at various possible prices.
Demand
As the price of a good or services increases, suppliers are willing to supply more goods & services.
Law of Supply state
What is the relationship described by the law of Demand?
As the price of a good or services increases, people tend to buy less of it.
If price increases, what happens to supply and demand?
Increase in supply, decrease in demand.
If price decreases, what happens to supply and demand?
Decrease in supply, increase in demand.
The relationship between price and quantity supplied.
Supply Curve
What is the direction of the Demand Curve?
Goes down.
What does a Demand schedule show?
Quantity of goods bought at a certain level of prices.
What does a Supply schedule show?
Quantity of goods that are sold at a certain level of prices.
What is the formula for the slope?
Slope = Vertical Change or Price / Horizontal Change or Quantity.
What is the linear equation used in market analysis?
y = a + bx.
In the equation y = a + bx, what does ‘y’ represent?
Price.
In the equation y = a + bx, what does ‘a’ represent?
Vertical Intercept.
In the equation y = a + bx, what does ‘b’ represent?
Slope on the line.
In the equation y = a + bx, what does ‘x’ represent?
Independent variable / quantity.
What is the formula for calculating slope?
Slope = (p2 - p1) / (q2 - q1).
The effect of change in price on the quantity of demand.
Price Elasticity of Demand measure
How is Price Elasticity of Demand (PED) calculated?
PED = % change in quantity demanded / % change in price.
