Microeconomics Supply And Demand Flashcards
What’s microeconomics
the study of individual units of an economy rather than the whole aggregate economy
What does equilibrium on a graph mean
Market working efficiently and effectively
What causes movements along supply/demand curve
Quantity and price factors
What causes new supply/demand curves
Factors that aren’t quantity or price related
In supply, relationship between price and quantity supplied is _ meaning …
Positive
Upward sloping supply curve
Relationship between price and quantity demanded is _ meaninf …
Negative
Downward sloping demand curve
Factors creating new supply curve. 6
Prices of four factors of production
Efficient utilisation of factors of production
Technological advances
Producer decisions
Gov policies (tax, subsidies, legislation)
Natural conditions
Factors creating new demand curve. 6
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
Elasticity of curve meaning
The degree to which demand/supply for a good or service varies with price
Elasticity formula
%change in quantity / % change in price
Types of elasticities
Perfectly elastic
Elastic
Unitary
Inelastic
Perfectly inelastic
Elasticity value of perfect elasticity
Infinity
Elasticity value of elastic
Over 1
Elasticity value of unitary
1
Elasticity value of inelastic
Between 1 and 0
