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Finance And Economics > Microeconomics Supply And Demand > Flashcards

Microeconomics Supply And Demand Flashcards

1
Q

What’s microeconomics

A

the study of individual units of an economy rather than the whole aggregate economy

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2
Q

What does equilibrium on a graph mean

A

Market working efficiently and effectively

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3
Q

What causes movements along supply/demand curve

A

Quantity and price factors

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4
Q

What causes new supply/demand curves

A

Factors that aren’t quantity or price related

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5
Q

In supply, relationship between price and quantity supplied is _ meaning …

A

Positive
Upward sloping supply curve

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6
Q

Relationship between price and quantity demanded is _ meaninf …

A

Negative
Downward sloping demand curve

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7
Q

Factors creating new supply curve. 6

A

Prices of four factors of production
Efficient utilisation of factors of production
Technological advances
Producer decisions
Gov policies (tax, subsidies, legislation)
Natural conditions

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8
Q

Factors creating new demand curve. 6

A

Real income (what ppl can afford
Tastes and preferences
Population changes
Demand for substitute and complementary goods
Changes in expectations about future prices
Interest rates

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9
Q

Elasticity of curve meaning

A

The degree to which demand/supply for a good or service varies with price

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10
Q

Elasticity formula

A

%change in quantity / % change in price

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11
Q

Types of elasticities

A

Perfectly elastic
Elastic
Unitary
Inelastic
Perfectly inelastic

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12
Q

Elasticity value of perfect elasticity

A

Infinity

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13
Q

Elasticity value of elastic

A

Over 1

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14
Q

Elasticity value of unitary

A

1

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15
Q

Elasticity value of inelastic

A

Between 1 and 0

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16
Q

Elasticity value of perfectly inelastic

A

0

17
Q

Description of perfectly elasticity curve

A

Demand/supply falls to zero as result of any price change

18
Q

Description of elastic

A

Large change in demand/supply as result of price change

19
Q

Description of unitary

A

Percentage change in demand/supply is equal to percent change in price

20
Q

Description of inelastic

A

Small change in demand/supply as result of price change

21
Q

Description of perfectly inelastic

A

No change in demand/supply as result of price change

22
Q

Level of elasticity to substitute good

A

Elastic

23
Q

Level of elasticity to non substitute good

A

Inelastic

24
Q

Level of elasticity to complimentary good

A

Depends on elasticity of that which is compliments and if complimentary good has substitutes

25
Q

Level of elasticity to luxury goods

A

Elastic

26
Q

Level of elasticity to necessity goods

A

Inelastic

27
Q

Level of elasticity to inferior good

A

Negative elasticity of demand

28
Q

Level of elasticity to normal good

A

Positive elasticity of demand

Finance And Economics (11 decks)

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