Micro 1.2.2+4 Flashcards

1
Q

What causes movement along demand curve?

A

Price change

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2
Q

What causes shifting of demand curve?

A

Non price determinants

Advertising
Fashions
Population size
Incomes

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3
Q

What is joint demand

A

Change in price of one affects demand for compliments

E.g low tobacco price, more demand for filters and paper

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4
Q

What is competing demand?

A

Change in price of one affects demand for substitutes

Rise in cigarette price affects demand for vapes

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5
Q

What is composite demand?

A

Change in demand of one affects supply of good for other uses

E.g fish for food and fish for Omega 3 oil

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6
Q

What is derived demand?

A

Change in demand for good affects demand for factor of production

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7
Q

What is utility?

A

The measure of satisfaction we get from purchasing or consuming good

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8
Q

What is paradox of value?

A

Diamond water paradox

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9
Q

What is effective demand

A

Willingness and ability of consumers to purchase goods at different prices.

Show amount that consumers are actually buying. Excludes latent demand

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10
Q

What is latent demand?

A

Where willingness to purchase goods may be limited by inability to afford it

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11
Q

What is market supply?

A

The amount of goods and services producers plan to sell at each given price level

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12
Q

What is extension and what is contraction?

A

Contraction is closer to left

Extension is closer to right

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13
Q

Things that cause a shift in market supply?

A

Costs of production- changes in raw material cost, improved technology, gov subsidies

Expectations of future prices, lower supply, stockpile for future

Weather, random shocks

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