Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

A Levels - Economics > Price Determination in a Competitive Market > Flashcards

Price Determination in a Competitive Market Flashcards

1
Q

Equilibrium Price

A

The price at which planned demand for a good or service exactly equals planned supply

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Supply

A

The quantity of a good or service that firms are willing and able to sell at given prices in a given period of time

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Demand

A

The quantity of a good or service that consumers are willing to buy at given prices in a given period of time

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Effective Demand

A

The desire for a good or service backed by an ability to pay

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Market Demand

A

The quantity of a good or service that all the consumers in a market are willing and able to buy at different market prices

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Condition of Demand

A

A determinant (or factor) of demand: other than the good’s own price, that fixes the position of the demand curve

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What are the factors of demand?

A

Population, Advertising, Substitute Goods, Income, Fashion, Interest Rates and Complimentary Goods

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What shows an increase in demand?

A

A rightward shift of the demand curve

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What shows a decrease in demand?

A

A leftward shift of the demand curve

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Normal Good

A

A good for which demand increases as income rises and demand decreases as income falls

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Inferior Good

A

A good for which demand decreases as income rises and demand rises as incomes fall

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Elasticity

A

The proportionate responsiveness of a second variable to an initial change in the first

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Price Elasticity of Demand

A

Measures the extent to which the demand for a good changes in response to a change in the price of that good

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

The steeper the graph, the ________ the Demand.

A

More inelastic

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

The shallower the graph, the _________ the Demand.

A

More elastic

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What is is the demand price elasticity of a good/service which is inelastic?

A

-1

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What is is the demand price elasticity of a good/service which is elastic?

A

-1>

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Income elasticity of demand

A

measure the extent to which the demand for a good changes in response to a change in income.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Income elasticity of Demand (Formula)

A

Percentage change in quantity demanded/Percentage change in income

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Cross elasticity of Demand

A

Measure the extent to which the demand for one good changes in response to a change in the price of another good

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Cross elasticity of demand (Formula)

A

Percentage change in quantity demanded of X/Percentage change in the price of Y

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What type of good is in joint supply?

A

Complementary Goods

23
Q

What type of good is in competing demand?

A

Substitute Goods

24
Q

Market Supply

A

The quantity of a good or service that all firms plan to sell, at given prices, in a given period of time.

25
Q

Profit

A

The difference between total sales revenue and total costs of production

26
Q

Total revenue

A

The money a firm receives from selling it output, calculated by multiplying the price by the quantity sold

27
Q

Conditions of supply

A

Determinants (factors) of supply, other than the goods own price, that fix the position of supply

28
Q

Factors of Supply:

A

Productivity, indirect taxes, number of firms in the market, technology, subsidies, weather, costs of production

29
Q

What shows an increase in supply?

A

A rightward shift of the supply curve

30
Q

What shows a decrease in supply?

A

A leftward shift of the supply curve

31
Q

Price elasticity of supply

A

Measures the extent to which the supply of a good changes in response to a change in the price of that good

32
Q

Price elasticity of supply (formula)

A

Percentage change in quantity supplied/Percentage change in price

33
Q

The steeper the graph, the__________ the supply.

A

More inelastic

34
Q

The shallower the graph, the ___________ the Supply.

A

More elastic

35
Q

What are the factors of Demand Elasticity?

A

Substitutability, Percentage of income, Necessity/luxury, the width of the market, time

36
Q

What are the factors of Supply Elasticity?

A

Length of the production period, availability of spare capacity, ease of accumulating stocks, ease of moving between production methods, ease of entering a market,m time

37
Q

When is demand more elastic?

A

In the long run, because it takes time to respond to price change

38
Q

When is supply more elastic?

A

In the long run, as it takes time for firms to respond to higher output

39
Q

Equilibrium

A

A state of rest or balance between opposing forces (supply and demand curve)

40
Q

Disequilibrium

A

A situation in a market where there is excess supply or excess demand

41
Q

Market Equilibrium

A

A market is in equilibrium when planned demand equals planned supply and the demand curve crosses the supply curve. In this situation, there is no excess demand or excess supply in the market. Unless an event disturbs the equilibrium, there is no reason for the price to change.

42
Q

Market Disequilibrium

A

Exists at any price that isn’t the equilibrium price. When the market is in disequilibrium, either excess demand or excess supply exists in the market. Excess demand causes the price to rise until a new equilibrium is established. Conversely, excess supply causes the market price to fall until a new equilibrium is achieved.

43
Q

Excess supply

A

When firms wish to sell more than consumers wish to buy, with the price above the equilibrium point

44
Q

Excess Demand

A

When consumers wish to buy more than firms wish to sell, with the price below the equilibrium point

45
Q

Joint Supply

A

When one good is produced, another good is also produced from the same raw materials

46
Q

Competing supply

A

When raw materials are used to produce one good, they cannot be used to produce another good

47
Q

Complementary Good

A

A good in joint demand, or a good which is demanded at the same time as another good

48
Q

Substitute good

A

A good in competing demand, namely a good which can be used in place of the other

49
Q

Composite Demand

A

Demand for a good that has more than one use

50
Q

Derived Demand

A

Demand for a good which is input into the production of another good

51
Q

Productive efficiency

A

For the economy as a whole occurs when it is impossible to produce more of one good without producing less of another. For a firm, it occurs when the average total cost of production is minimised

52
Q

Allocative efficiency

A

Occurs when the available economic resources are used to produce the combination of goods and services that best match people’s tastes and preferences

53
Q

Merit Good

A

A good which when consumed leads to benefits which other people enjoy or a good for which long term benefits of consumption exceeds the short-term benefit enjoyed by the person consuming the good.

A Levels - Economics (8 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions