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Applied Economics > Lesson 3 & 4 > Flashcards

Lesson 3 & 4 Flashcards

1
Q

is the value of goods and the cost of making the goods.

A

Price

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2
Q

it is determined by the interaction of the forces of supply and demand.

A

Price

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3
Q

is associated with consumption and is represented by buyers or consumers.

A

Demand

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4
Q

is associated with production and is represented by sellers or producers.

A

supply

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5
Q

this refers to the willingness of the buyers to buy the product at a given price, time and place. There is an element of purchasing power, this means you have the capability to buy the product or service.

A

Demand

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6
Q

shows the inverse relationship between price and quantity demanded.

A

Demand Schedule

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7
Q

“If price increases quantity demanded decreases. If price decreases quantity demanded increases.”

A

Law of Demand

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8
Q

when price of product increases consumers will able to buy less within a given money income.

A

Income Effect

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9
Q

when the price of the product rises consumers shift their purchases to other products whose price are relatively lower.

A

Substitution Effect

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10
Q

this refers to a movement of the demand curve itself, indicating changes in quantities bought at each price.

A

Change in Demand

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11
Q

refers to the movement along a given demand curve caused by change in price.

A

Change in Quantity Demanded

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12
Q

people buy more goods and services when their income increases

A

Income

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13
Q

more people means more demand for goods and services.

A

Population

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14
Q

demand for goods and services increases when people likes it or prefer it.

A

taste and preferences

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15
Q

if price is expected to increase in basic commodities consumers will have panic buying.

A

Price Expectations

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16
Q

when price of certain product increases buyers tend to buy substitute product.

A

Price of related goods

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17
Q

the theory is only true and correct if the assumption of ceteris paribus is applied, which means all other things are equal or constant.

A

Validity of the Law of Demand

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18
Q

these are commodities whose demand varies directly with money supply (ex. Appliances; jewelry).

A

Superior/Normal goods

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19
Q

these are goods whose demand varies inversely with money income (ex. Used clothing; second hand cars).

A

Inferior goods

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20
Q

the price of one good and the demand for the other are directly related (ex. Coke & Pepsi; Ariel & Surf laundry powder soap)

A

Substitute goods

21
Q

these are goods that go together and that they are jointly demanded. The price of one good and the demand for the other are inversely related (ex. Car and gasoline; mobile phone and battery).

A

Complementary goods

22
Q

these are goods which are not related at all (ex. Bread and nails; paper and glass).

A

Independent goods

23
Q

refers to the willingness of the seller or producer to sell or produce the product at a given price, time and place.

A

Supply

24
Q

shows the direct relationship between price and quantity.

A

Supply Schedule

25
Q

“If price increases quantity supply increases. If price decreases quantity supply decreases.”

A

Law of supply

26
Q

refers to the movement of the supply curve indicating changes in quantity bought at each price.

A

change in supply

27
Q

refers to the movement along the supply curve caused by the change in price.

A

change in quantity supplied

28
Q

this refers to the techniques or methods of production, which increases supply of goods.

A

Technology

29
Q

this refers to raw materials, labor and the like. Thus, an increase of these increase the cost of production and decrease of quantity supplied.

A

Cost of production

30
Q

more sellers means more supply and vice versa.

A

Number of sellers

31
Q

changes in the price of goods affect the supply of such goods. An increase of price of one good, decreases its quantity supplied and increases the quantity supplied of its substitute product.

A

Prices of other goods

32
Q

if producers expect prices to rise very soon, they usually keep their goods and then release them in the market when the prices are already high.

A

Price Expectations

33
Q

taxes increase cost of production and it discourages production because it reduces the earnings of businessmen.

A

Taxes and subsidies

34
Q

is a situation where quantity supplied is equal to quantity demanded.

A

Equilibrium Price

35
Q

sellers are willing to sell at a higher price

A

Surplus

36
Q

buyers are willing to purchase at a lower price

A

shortage

37
Q

indicates the extent to which changes in price or other factors cause changes in the quantity demanded. Mankiw (2018) explains the three classifications of demand elasticity: price elasticity of demand, income elasticity of demand, and cross elasticity of demand.

A

Demand Elasticity

38
Q

refers to the reactions or responses of the buyers to changes in the price of goods and services.

A

Price Elasticity of Demand

39
Q

where a change in price results in a greater change in quantity demanded.

A

Elastic Demand

40
Q

where a change in price results in a lesser change in quantity demanded.

A

Inelastic Demand

41
Q

when a change in price results in an equal change in quantity demanded.

A

Unitary Demand

42
Q

refers to the determination of how much the quantity demanded of an excellent response to a change in consumers’ income, computed as the percentage change in the amount demanded divided by the percentage change in income.

A

Income Elasticity of Demand

43
Q

which is how responsive or elastic the quantity demanded good is in response to a change in the price of another good.

A

Cross Elasticity of Demand

44
Q

is the measure of the responsiveness in quantity supplied to a change in price for a specific good.

A

Price Elasticity of Supply

45
Q

refers to a change in price results to a greater difference in quantity supplied.

A

Elastic Supply

46
Q

refers to a change in price results to a lesser change in quantity supplied.

A

Inelastic Supply

47
Q

a change in price results to an equal change in quantity supplied. Goods are classified as semi-industrial or semi-agricultural products.

A

Unitary Supply

48
Q

a change in price results to an equal change in quantity supplied. Goods are classified as semi-industrial or semi-agricultural products.

A

Unitary Supply

Applied Economics (2 decks)

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