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Economics > Midterms > Flashcards

Midterms Flashcards

1
Q

The interaction and agreement between buyers and sellers of trading or exchange

A

Market

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2
Q

A consumer buys in a seller sells

A

Market

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3
Q

Types of Market

A

Goods Makret
Labor Market
Financial Market

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4
Q

The most common type of market because it is where we buy and sell goods

A

Goods Market

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5
Q

Includes the stock market or securities of corporations are traded

A

Financial Market

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6
Q

Financial Market Participants

A

Central bank
Bank
corporation
institutional
traders
retail traders brokers market makers government

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7
Q

The willingness of a consumer to buy a commodity at a given price

A

Demand

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8
Q

Shows the various quantities the consumer is willing to buy at various prices

A

Demand Schedule

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9
Q

Shows how the quantity demanded is dependent on its determinants which is the price itself the most important of which is the price of the good itself

A

Demand Function

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10
Q

A graphical illustration of demand schedule with the price being measured on the vertical axis (y and the quantity demanded of the horizontal axis (x)

A

Demand Curve

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11
Q

Is felt when a change in the price of good changes on the consumers real income purchasing power which is the capacity to buy with a given income

A

Income effect

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12
Q

The capacity to buy with a given income

A

Income purchasing power

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13
Q

The volume of goods and services one can buy with his or her income

A

Purchasing power

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14
Q

Felt when a change in the price of good changes due to alternative consumption of substitute goods

A

Substitution effect

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15
Q

Felt when a change in the price of good changes due to alternative consumption of substitute goods

A

Substitution effect

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16
Q

Formula for Demand

A

∆Q = Q2 - Q1
∆P = P2 - P1

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17
Q

According to the Law of Demand, what kind of relationship does the price of a good and the quantity demanded of the good has?

A

Inverse Relationship

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18
Q

How is the relationship inverse between the price of a good and the quantity demanded of that good.

A

As a price increases, the quantity demanded decreases
When is the price decreases, the quantity demanded increases

19
Q

Non-price determinants of demand (formula)

A

D = f (P, T, Y, E, PR, NC)

20
Q

Non Price Determants of Demand

A

Price (P)
Taste (T)
Income (Y)
Expectations (E)
Price of related goods (PR)
Number of Consumer (NC)

21
Q

If this determinant of demand decreases, the capacity to buy decreases and the demand will also decrease even when prize does remains the same. The opposite will happen when this determinants increases.

A

Consumer Income

22
Q

Improved ______ for product will cause a consumer to buy more of that good even if it’s price does not change.

this is a non price determinants of demand

A

Taste

23
Q

Another non price determinants is determined by future price and income

A

Consumer’s expectations

24
Q

A non price determinants where substitute goods are those that are used in place of each other

A

Prices of related goods

25
Q

Is also an important non price determinants that will affect market demand for a good

A

Number of consumers

26
Q

Simply a movement from one point to another on that curve

A

Shift of the demand curve

27
Q

When a change in the price of good causes the quantity demanded for that good to change

A

Shifts of the demand curve

28
Q

Quantity of goods that the seller is willing to offer for sale

A

Supply

29
Q

Shows the different quantities the seller is willing to sell at various prices

A

Supply schedule

30
Q

Shows the dependence of supply on the various determinants that affect it

A

Supply function

31
Q

What are the non-price determinants in supply?

A
  1. Cost of production
  2. technology
  3. availability of raw
32
Q

How does these non-price determinants in supply can change the entire supply product?

A

They can cause and upward or downward change in the entire supply of the product, and this change is referred to as a shift of the supply curve

33
Q

What kind of relationship does the price and supply have?

A

Direct relationship

34
Q

How price and supply have a direct relationship?

A

As a price increases, the product supply also increases

35
Q

Movements along and shifts in the supply curve

A

Shift of supply curve

36
Q

What is the reason for a movement along the supply curve?

A

The change in the price of goods

37
Q

What happens when a supply increases due to a non price determinants?

A

Then entire supply curve will shift to the right to reflect an increase or to the left to reflect a decrease

38
Q

What are the shifts in the supply curve and what do they mean?

A

Shift to the right <— positve/increase
Shift to the left —> negative/decrease

39
Q

A state of balance when demand is equal to supply

A

Equilibrium

40
Q

What does the equality in the equilibrium mean?

A

The quantity sellers are willing to sell is also the quantity buyers are willing to buy for a price

41
Q

What does surplus mean?

A

Excess supply;

High price
High supply
Low demand

42
Q

Where is surplus located?

A

Above equilibrium

43
Q

What is shortage

A

Excess Demand;

High Demand
Low Supplies
Low Prices

44
Q

Where is the shortage

A

Below equilibrium

Economics (5 decks)

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