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AS Microeconomics > Price Determination > Flashcards

Price Determination Flashcards

1
Q

Elasticity

A

The responsiveness of one variable in relation to another

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2
Q

Price Elasticity Of Demand

A

The responsiveness of demand to a change in price

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3
Q

Price Elastic

A

A change in price will lead to a more than proportional change in demand

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4
Q

Price Inelastic

A

Change in price will lead to a less than proportional change in demand

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5
Q

Perfectly Elastic

A

Could not increase price as there would be no demand

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6
Q

Perfectly Inelastic

A

The firm could charge as high a price as it wanted

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7
Q

Determinants Of Price Elasticity Of Demand

A

Availability of substitutes
Time
Definition of the market

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8
Q

Income Elasticity Of Demand

A

The responsiveness of demand to a change in income

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9
Q

Income Elastic

A

Change in income will lead to a more than proportional change in demand

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10
Q

Income Inelastic

A

Change in income will lead to a less than proportional change in demand

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11
Q

Determinants Of Income Elasticity Of Demand

A

Necessity or luxury
Level of income of a consumer
Standards of living
The economic cycle

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12
Q

Cross Elasticity Of Demand

A

The responsiveness of demand for one good to a change in price of another good

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13
Q

Cross Elastic

A

Change in price of one good will lead to a more than proportional change in demand of another good

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14
Q

Cross Inelastic

A

Change in price of one good will lead to a less proportional change in demand of another good

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15
Q

Determinants Of Cross Elasticity Of Demand

A

Substitutes

Complementary Good

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16
Q

Supply

A

The amount of a good or service producers are willing and able to sell at any given price at a point in time

17
Q

Determinants Of Supply

A 
Price of the good
Impact of changing costs of production
Technological progress
Prices of other goods/services
Government policy
Future expectations
18
Q

Price Elasticity Of Supply

A

Responsiveness of supply to a change in price

19
Q

Determinants Of Price Elasticity Of Supply

A

Price
Substitutes
Time

20
Q

Market Equilibrium

A

Point at which demand is equal to supply

21
Q

Equilibrium Price

A

All products sold as demand equals supply

Known as the market clearing price

22
Q

Commodity Market

A

Buyers and sellers come together to exchange homogenous products

23
Q

Hard Commodities

A

Commodities extracted from the ground

24
Q

Soft Commodities

A

Commodities that can be grown

25
Q

Buffer Stocks

A

Government intervention to reduce fluctuations in price and output

26
Q

Composite Demand

A

An increase in demand for one good or service will restrict its availability for another use

27
Q

Derived Demand

A

Demand for a product occurs as a result of demand for another good or service

28
Q

Joint Supply

A

Production of a product creates a by-product that can also be supplied

AS Microeconomics (5 decks)

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