Microeconomics Flashcards
Price goes down, quantity goes up
Law of demand
Price goes up, supply goes up AEHC (v.v)
Law of supply
Anyplace where, or mechanism by which, buyers and sellers interact to trade g,s,r
Market
A tangible product customers wish to buy
Good
An often intangible product or action consumers wish to purchase
Service
The quantity of a g,s,r that consumers are willing and able to pay at a given price.
Quantity demanded
Price goes up and purchasing power goes down (v.v)
The income effect
An increase in the price of one good will increase the demand for its substitutes (v.v)
The substitution effect
Describes how the benefit of consuming more of a good falls with each additional unit
Diminishing marginal utility
The overall, or total demand for a g,s,r.
Market demand
A good for which there is a direct relationship between the demand for the good and income. Income increases, demand increases (v.v)
Normal good
A good for which there is an inverse relationship between the demand for the good and income. Income increases, demand decreases (v.v).
Inferior good
In the determinants of income — what causes a movement along the demand curve ?
Income effect
In the determinants of income — what causes a shift in the demand curve ?
Change in income
A change in the quantity of a g,s,r demanded at every price
Change (shift) in demand
A change in the quantity of a g,s,r demanded due to a change in its price.
Movement along the demand curve ( down the line/increasing) v.v
The perception and desirability associated with consuming a g,s,r
Tastes and Preferences
Market participants who seek to obtain g,s,r.
Buyers
The anticipation by individuals and firms of costs and benefits that lie in the future
Expectations
When a NPD changes - increasing or decreasing in demand
The demand curve shifts
When a price of a good changes - increase or decrease in quantity demanded
Movement along the demand line
If the # of buyers increase - demand will ?
Increase
If consumers expect an increase in the future - demand will ? V.V
Increase
G,s,r that are viewed as replacements for one another.
Substitutes
G,s,r that are used or consumed with one another
Complements
Does substitutes have a direct or inverse relationship?
Direct
Does complements have an direct or inverse relationship?
Inverse
If at lease one input of production is fixed, the marginal productivity of additional variable resources will eventually fall, AEHC
Diminishing marginal productivity
The overall, or total supply of a g,s,r
Market supply
A change in the quantity of a g,s,r supplied at every price. Shift or movement along the line?
Change (shift) in supply
A change in the quantity of a g,s,r supplied due to a change in its price. Shift or movement along the curve?
Movement along the supply curve
A payment made by the government that does not necessarily require an exchange of economic activity in return
Subsidies
A payment made to the government that is the result of economic activity
Tax
The inputs used to produce a g,s,r
Resource
The knowledge, inventions and innovations that can potentially increase resource productivity.
Technology
Market participants who are willing and able to sell g,s,r
Sellers
The anticipated future outcomes, including prices, that sellers associate with production of a g,s,r
Sellers expectations
