price determination in a competitive market Flashcards
demand
quantity buyers are willing and able to buy
demand curve shows
inverse relationship of p and q
price up demand down
changes in price cause ____ of demand
contraction/expansion
what cause shifts in demand
population
inetrests
advertisement
related goods
what is diminishing margins utility
the benefit derived from consuming the good falling (utility derived becomes 0)
PED formula
%/\P
PED def
change in responsiveness of QD to a change in price
price elastic good
very repsosive
typically non-essential
PED greater than 1
price inelastic good
not as responsive/less than the change in P
essential goods/inferior
PED less than 1
unitary elastic means
same change in price and change in demand (1)
when demand does not change
perfectly inelastic (0)
price changes, there is no demand
infinity
factors influencing PED
substitutes
necessity
addicition
proportion of income spent on good
YED formula
%/\Y
inferior good
income up, demand down
yes less than zero
normal good
income up demand up
yes greater than 0
lux good
income up demand up even more
yes bigger than 1
xed formula
%/\P of B
complementary goods have a _____ XED
negative
(one good increases in price, demand for both will fall)
demand curve downward sloping
close compliments
small fall in price of one good, large increase in QD of the other
substitutes
replace eachother
positive XED
up slope demand curve
unrelated goods
XED=0
supply
quantity of good a producer is willing and able to supply
shifts of supply
weather
productivity
time
wage
number of firms
tech
substitutes
