Lesson 29 - unit 6 Flashcards
How does changing price affect supply?
When the price of a good goes up, the supply increases. When the price of a good goes down, supply decreases.
In what ways does demand change?
demand changes because of
1. changes in price
2. change in consumers’ income
3. change in consumers’ preferences
4. number of consumers
5. And price of related goods and services.
When price changes, how does the demand curve on a graph change?
The curve stays the same, you just move demand up or down.
When a factor other than price changes, how does the demand curve change?
It shifts left or right.
What is price elasticity of demand?
A measure of how much demand changes in response to changes in price.
What is cross-price elasticity of demand?
A measure of how much demand for one product changes because of a price change for another good.
What is income elasticity of demand?
It shows how much demand changes with regard to consumers income.
What is price elasticity of supply?
It shows how much the quantity supplied changes because of price.
What is the economic meaning of the term sticky?
Slow to change.
What are menu costs?
Sticky prices, or prices that are slow to change because of long-term commitments.
