Micro Economics Flashcards
Demand rises while price falls
Law of demand
Price rises income stays the same, effect on demand ?
Fewer goods bought
To have a demand for a good
Willing and able to buy good at given price
Consumer act when price of good increases
Substitute for cheaper item
What causes demand curve to shift
Change in demographics
How elasticity effects business pricing policy
Increase in price, reduce total revenue
Elasticity demand measures
Consumers demand affected by price
How does consumer need vs. want of product affect purchase
Consumer will purchase needed good no matter the price
What does availability of substitutes have on elasticity of demand
More elastic
Which is inelastic: steak or medicine
Medicine
Ceteris Parbius
All things other than price hold constant
Owners of digital cameras have to buy memory cards in order to use cameras. Cameras and memory cards are.
Complements
elasticity of demand formula
% change in quantity/ % change in price
Paper plate factory make more paper plates when market price goes up on
Law or supply
Always rises from left to right
Supply curve
When price or product goes down producers
- Produce less
- leave market
A supply schedule shows
Supply for goods at different prices
How does technology affect production
- increases supply
- cheaper
Fixed costs
Cost don’t change no matter supply
If company makes product at 15$ for five of them and 16$ to make six of them the 1$ difference Is
Marginal cost
If supplier reports marginal revenue is at 5$ this means
Consumers pay market price of 5$
Subsidies
Government influence on supply
A minimum price for soybeans is an example of
Government subsidy
Cargo ships & haircuts, which is likely to be inelastic in short term
Cargo ships
