Economics Supply And Deman Flashcards
Law of Demand
When price goes up and demand goes down and vice versa
Real Income effect
If the price of then good goes up but peoples income doesnt then people wont keep buying the good
Substation effect
If there is two products that do the same thing but ones price increases people wont buy it
Law of Diminishing marginal utility
The extra happiness a customer gets from buying your product goes down every time they buy it again
Normal and Inferior goods
When more money is had then more normal goods are bought when you have less money you buy the inferior goods.
Subs v Complements
Subs- same use.
Comp - is in complement
Elastic v Inelastic
E: Luxury
Inelastic: Normal good
Price of elastic demand
How much consumers react to a change in price
Law of supply
Price goes up with quantity supplied and vice versa because of a direct relationship
Law of diminishing returns
The more factors of productions then the less profits
Equilibrium price
Producers are willing to sell a good is equal to what consumers are willing to pay
Equilibrium quantity
The quantity where s and d crosss each other on the graph
Shortage
When d is bigger than s
Surplus
When qs is greater than qd at current proce
Price ceiling
A legal maximum price a good can be sold at
