Module 3 - The Framework of Financial Management (Demand/Supply) Flashcards
Focuses on the behavior and purchasing decisions of individual and firms.
Microeconomics
Market price is determined based on…
Demand and Supply
is an allocation of a limited supply of a good or resource to users who would like to have more of it.
Rationing
It is the quantity of a good or service that consumers are willing and able to purchase at a range of prices at a particular time.
Demand
A demand curve shows an…
inverse relationship between the price and quantity demanded.
defined as the relationship between Percent Change in Quantity Demanded and Percent Change in Price.
Price Elasticity of Demand
If a small rise in price causes consumers to choose a much smaller amount of a product.
Elastic Demand
If a substantial increase in price results only in small reduction in quantity demanded.
Inelastic demand
Despite an increase in price, consumers still purchase the same amount.
Perfectly Inelastic
A percent in increase in price results smaller reduction in sales.
Relatively inelastic
A percent change in quantity demanded is equal to the percent change in price.
Unitary elasticity
A percent increase in price leads to a larger reduction in purchases.
Relatively elastic
Consumers will buy all goods at the market price, but none will be sold above the market price.
Perfectly elastic
is a principle that states that, there will be a direct relationship between the price of a good and the amount of it offered for sale.
Law of Supply
measures the percentage change in the quantity supplied of a product resulting from a change in product price.
Elasticity of Supply
