Exam 2 Flashcards
What is demand?
demand is a schedule, that consumers are willing and able to purchase at various prices.
What is demand quantity?
specific number that consumers are willing to pay at a specific price
what is the law of demand
as price falls, quantity demand rises
as price rises, quantity demand falls
what does diminishing marginal utility mean?
the more of a product we consumer, the less satisfaction we expect for the next unit
name 7 determinants of demand
price
taste and preference
income
wealth
price of related goods
number of buyers
expectations of the future
In income what does inferior good mean?
as income rises, demand falls
In income, what does normal good mean?
income rises, demand rises
what is quantity supply?
specific amount of units that firms are able and willing to produce at a specific price
what is the law of supply
as price falls, supply demanded falls
as price rises, supply demanded rises
Name the 5 determinants of supply
price
resource price
technology
price of other goods
price expectations
what is a surplus? and what happens to price
quantity supply is greater than quantity demanded. price will go down
what is a shortage and what happens to price
quantity supplied is less that quantity demanded. price will go up
what is a price floor?
gouv sets minimum price
