Section 2

Question 1

Competitive Markets

Answer 1

places or mechanisms that bring buyers and sellers together (for mutual gain)

Question 2

Supply and Demand Model

Question 3

Demand

Answer 3

schedule or curve that shows how much of something consumers are willing and able to buy at each of a series of prices

Question 4

Law of Demand

Answer 4

as price falls, quantity demanded rises and as price rises, quantity demanded falls

Question 5

Demand Schedule

Question 6

Quantity Demanded

Question 7

Demand Curve

Question 8

Factors that Shift Demand (D-Shifters)

Answer 8

1. Tastes
2. # of buyers in the market
3. Income
4. Price of Related Goods
5. Consumer expectations of future prices and incomes

Question 9

Change in Demand (Dynamic) vs. Movement Along the Demand Curve (Static)

Answer 9

Change in demand - a shift in the demand curve. Caused by the determinants of demand.
Change in quantity demanded - movement based on price on a fixed demand curve.

Question 10

Substitutes vs. Complements

Question 11

Individual Demand Curve

Question 12

Normal Goods

Question 13

Inferior Goods

Question 14

Supply

Answer 14

Schedule or curve showing the amounts of a product that producers are willing and able to sell at each of a series of prices

Question 15

Law of Supply

Answer 15

As price rises, the quantity supplied rises, as price falls, the quantity supplied falls

Question 16

Quantity Supplied

Question 17

Supply Schedule

Question 18

Supply Curve

Question 19

Factors that Shift Supply (S-Shifters)

Answer 19

1. Resource prices (or input prices) *Factors of Production
2. Technology
3. Business Taxes and subsidies
4. Prices of related goods
5. Expectations of future profits
6. # of sellers in the market

Question 20

Change in Supply (Dynamic) vs. Movement Along the Supply Curve (Static)

Question 21

Inputs (Factors of Production [or resources], such as Land, Labor, and Capital)

Question 22

Individual Supply Curve

Question 23

Equilibrium

Answer 23

Supply=Demand

Question 24

Equilibrium Price (AKA: Market Clearing Price)

Question 25

Equilibrium Quantity (QS = QD)

Question 26

Surplus (QS > QD) vs. Shortage (QS < QD)

Question 27

Price Controls

Question 28

Price Ceilings

Answer 28

Govt sets max price (leads to a shortage~excess demand)

rent control

Question 29

Price Floor

Answer 29

govt. sets price minimum (excess supply)

Minimum Wage

Question 30

Inefficient Allocation to Consumers

Question 31

Inefficiently Low Quality

Question 32

Wasted Resources

Question 33

Black Market

Question 34

Quantity Control/Quotas

Question 35

Quota Rent

Question 35

License

Question 36

Wedge/Deadweight Loss