Economics Prep Flashcards
Define what a Market is
A Place or situation where buyers and sellers meet to exchange goods.
Define Market Forces
changing producers supply or consumers demand which brings change to price and quantity in a market
Increase in demand causes the demand curve to move to the
Right
decrease in demand causes the supply curve to move to the
Left
What are the determinants affecting supply
Price of goods
Costs of production
Price of “related” goods
change in technology
Increase in Supply cause the supply curve to move to the
Right
Decrease in supply causes the supply curve to move to the
Left
What is Elasticity
The measure of responsiveness of quantity demanded to a given change in price
Describe Elastic Proportions
the Quantity demand changes proportionately MORE than the change in price
Describe Inelastic Proportions
the Quantity demand changes proportionately LESS than the change in price
what are the Determinants of demand elasticity?
Availability of substitutes
Necessity vs Luxury
Costs of Good
Frequency of price changes
what is the relationship between price and revenue with Elastic Demand?
increase in price decreases revenue
decrease in price increases revenue
what is the relationship between Price and Revenue in Inelastic Demand?
increase in price increases revenue
decrease in price decreases revenue
Define Demand
The quantity or amount of good or service that an individual or household is willing and able to purchase at various prices
Individual demand
the demand of one individual consumer or household
Market demand
the combined total quantity demanded by ALL consumers of a good or service
Aggregate demand
the total combined demand for all final goods and services in an economy
what is a demand curve
a graph of the relationship between price and quantity demanded - SLOPES DOWN
What are the determinants of Demand?
Tastes and preferences
income changes
PRICE of substitute products
PRICE of complementary products
what is a free market?
a market not influenced by government intervention - where markets are left to establish a price and quantity
what is a government intervention market
where the government must intervene in markets to correct market failures
what is market equilibrium
the market price is where the quantity supplied is equal to the quantity demanded
Productivity
the measure of how efficiently we are using our resources
The process of Productvity
Inputs - transformation - outputs
Resources of Productivity is defined as
Land, Labour, Capital and Enterprise
