ECONOMICS QUIZ Flashcards
an interaction between buyers and sellers of trading or exchange.
Market
most common type of market because it is where we buy consumers goods.
goods market
where the workers offer services and look for jobs, and where employers look for workers to hire.
labor market
includes the stock market where securities of corporations are traded.
financial market
is the willingness of a consumer to buy a commodity at a given price.
DEMAND
shows the various quantities the consumer is willing to buy at various prices.
demand schedule
shows how the quantity demanded of a good depends on its determinants, the most important of which is the price of the goods itself
demand function
is felt when the change in the price of a good changes the consumer’s real income or purchasing power, which is the capacity to buy with a given income. In other words, purchasing power is the volume of goods and services one can buy with his/her income.
Income effect
is felt when a change in the price of a good changes demand due to alternative consumption of substitute goods.
Substitution effect
there is an inverse relationship between the price of a good and the quantity demanded for that good.
The Law of Demand
Non-Price Determinants of Demand
✓ Income
✓ Taste
✓ Expectations
✓ Prices of related goods
✓ Population
can cause an upward or downward change in the entire demand for the product and this change is referred to as a shift of the demand curve.
non-price determinants
increase in the for a good will increase the demand for the complement
Complements
goods that are used together
Complements
The higher the population, the more consumers and the higher will be demand for the good.
number of consumers
When a change in the price of a good causes the quantity demanded for that good to change, this is illustrated on the same demand curve and is a simple movement from one point to another on that curve.
Shifts of the Demand Curve
the relationship between a range of prices and the quantities demanded at those prices,
demand
a certain point on the demand curve or one quantity on the demand schedule.
quantity demanded
curve
demand
specific point on the curve.
quantity demanded
quantity demanded at every given price for the entire market.
market demand
sum of all the individual buyer’s demand curves.states that when the price of a good decreases, it is as if the buyer of the good’s income went up.
market demand
states that when the price of a good decreases, it is as if the buyer of the good’s income went up.
income effect
states that when the price of a good decreases, consumers will substitute away from goods that are relatively more expensive to the cheaper goods
substitution effect
are goods that are consumed together.
Complements
are goods where you can consume one in place of the other.
Substitutes
If a buyer expects the price of a good to go down in the future, they hold off buying it today,
demand for that good decreases.
if a buyer
expects the price to go up in the future
demand for the good today increases
